J.P. Morgan believes that the downgrade of U.S. ratings will boost demand for high-grade corporate bonds.

J.P. Morgan stated that with the United States losing its last highest credit rating and bond yields rising, high-grade corporate bonds may become more attractive to fund managers. Last Friday, Moody's downgraded the credit rating of the United States, joining Fitch and S&P, which had previously rated the U.S. as less than AAA. Moody's stated that the reason for the downgrade is concerns about rapidly expanding debt and fiscal deficits, which will harm the U.S.'s position as a global capital destination and increase borrowing costs. J.P. Morgan strategists Eric Beinstein and Nathaniel Rosenbaum, citing another report from their interest rate team, said in a report on Monday that investors are uncertain about how the downgrade will affect bond valuations in the coming days and medium term. In the short term, given the uncertainty in trade and monetary policy amid structural changes in demand, the bias towards the yield curve is likely to "steepen" in a bear market.