JPMorgan Asset Management’s Iain Stealey thinks his fellow bond traders aren’t being aggressive enough about the Federal Reserve’s future policy path.

The fund manager expects that slowing global growth and deep-seated U.S.-China trade tensions will force the Fed to lower rates twice more in 2019. That’s more than futures traders, who are pricing in roughly 29 basis points of easing by the end of the year. Stealey is wagering that a more aggressive Fed will drive the yield curve steeper.

While the U.S. and China have agreed on the outlines of a partial trade agreement, Stealey isn’t expecting a “wholesale deal” that removes existing tariffs. Those levies will continue to drag on the global economy and force the Fed to commit to a “proper cycle” of rate cuts, he said. Those same concerns were behind the International Monetary Fund on Tuesday making the fifth-straight downgrade to its 2019 global growth forecast, which now calls for 3% expansion this year.

“The tariffs are starting to bite, and not just in manufacturing, but in the broader economy,” said Stealey, co-manager of the JPMorgan Global Bond Opportunities Fund. “We still see the global economy slowing, and in that environment, we think the Fed’s going to react to it.”

Betting on a steeper curve was one of 2019’s most popular trades, with the likes of Pacific Investment Management Co. and Vanguard Group Inc. calling for the curve to reverse course after some segments reached the flattest in more than a decade.

For months, that looked like a losing position. But the spread between three-month and 10-year Treasury yields is currently trading near 7 basis points after turning positive for the first time since July last week.

The curve’s recent steepening will accelerate should weakness in survey-based data bleed into the U.S. labor market, Stealey said. While U.S. manufacturing and services gauges unexpectedly dropped to multiyear lows in September, the unemployment rate declined to a half-century low last month.

Wednesday’s U.S. retail sales report may add to the gloomy outlook. It showed an unexpected 0.3% monthly contraction for September, suggesting consumers are starting to wobble as the main support for economic growth.

“Utimately, it’s hard for the curve to properly steepen” until the Fed commits to a prolonged rate-cutting cycle, Stealey said. “We’re at the point now where we’re going to see over the next few weeks if the data is going to significantly deteriorate and forces the Fed’s hand.”

This article was provided by Bloomberg News.