The Federal Reserve was smart to cut rates now rather than waiting for things to escalate, and its action should boost flows into U.S. bonds, according to JPMorgan Asset Management.

Investors should consider longer-dated government bonds in safe markets, Bob Michele, global head of fixed income at the asset manager, said in an email.

“The Fed rate cut validates the current rate environment and supports buying and holding high-quality duration,” he wrote. “This should lead to an acceleration of flows into the U.S. bond market from negative-yielding bond markets as the cost of hedging to euro or yen has been diminished.”

The Fed’s half-point cut on Tuesday was the first such emergency move since the 2008 financial crisis, taken amid concerns about the global economic fallout from the coronavirus outbreak. Investors initially cheered the move, before reverting back to concerns about a potential recession, with the S&P 500 Index ending Tuesday down 2.8% and the 10-year Treasury yield hitting fresh record-lows.

JPMorgan Asset is also watching to see how credit may be extended to small and medium-sized businesses that may face cash shortfalls as business declines.

“The Fed rate cut paves the way for the Small Business Administration to extend credit at a lower cost to needy borrowers,” Michele said. “We expect the capacity of the SBA to be increased if the infection rate in the U.S. accelerates.”

This article was provided by Bloomberg News.