(Bloomberg) -- Jupiter Asset Management is sticking with its “high conviction” in government bond exposure in its flagship funds, despite renewed market optimism about the US economy that has pushed global yields higher.

Being a bond bull has become increasingly unpopular at a time when Wall Street has tapered recession probabilities on last week’s blow-out jobs report, laying to rest some skeptics of a so-called “no-landing” scenario. But numbers under the surface aren’t quite as healthy and history shows any deterioration could see yields overshooting lower, according to Matthew Morgan, head of fixed income. 

“Today the market is pricing in a soft landing – worse outcomes aren’t visible yet,” he said in an interview. “And every time in history we’ve been there at this point it’s ended up as a harder landing than expected.”

The firm’s flagship strategies remain positioned for declining global growth in the medium term in Treasuries, Gilts and Australian dollar bonds, he said. 

The better-than-expected gain in US non-farm payrolls last month served as a rude awakening to pessimists as yields on 10-year benchmark Treasuries punch back through 4% and bets on US bond losses build. Strategists at Goldman Sachs Group Inc. have since cut slowdown probabilities back to 15% and investors have ditched bets that the Federal Reserve will deliver another half-point rate reduction this year.

Bond Traders Nix Fed Cut Bets Ahead of US Inflation Data

While some of Jupiter’s absolute return strategies have “modestly trimmed” bond exposure as a result, Morgan remains comfortable that inflation will continue to moderate and notes that outside the US, growth is weaker in Europe and across many emerging markets.

“One jobs print never tell you too much,” he said. “The private sector has been making a lower contribution to job growth than we’d associate with a healthy economy. That should worry people.” 

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