Different month, same risks.

That was the overarching message from JPMorgan analysts led by Marko Kolanovic, who bumped their duration allocation back up after a well-timed cut, while also upping their exposure to gold.

The bank cited recent remarks from Fed officials, as well as cleaner positioning and cheaper valuations for the decision to increase their bond exposure. “Recent shifts in Fedspeak challenge the market’s rate hike plans as the uptick in yields and steepening of the curve can function in lieu of the rate hike that the market had been expecting,” Kolanovic and co. said.

Although the bank acknowledged the potential for yields to move higher still in light of the supply overhang bedeviling the US long-end, JPMorgan’s strategists are “encouraged by positioning turning more neutral than it has been since spring,” and seem comfortable with valuations given that the increase in 10-year yields over the last two months was comparable to what Kolanovic described as “other large idiosyncratic moves over the last decade.” He mentioned the 2015 bund VaR shock and, of course, the taper tantrum in the US.

In addition, the bank said duration could be a decent hedge for worsening geopolitical risk, although they have that at least partially covered in their model portfolio via a Commodities Overweight which, as of now, has more gold exposure. I’d be doing myself a disservice not to note that Kolanovic also made the same point I’ve made repeatedly vis-à-vis duration this month. “Large moves over a short period have a tendency to peter out,” he wrote.

Speaking to the allure of gold, JPMorgan said the decision to increase their precious metals allocation within commodities was motivated by gold’s potential to serve “as a geopolitical hedge,” and also by the bank’s suspicions that real yields, having run sharply higher since July (and “sharply” is an understatement) could retrace, at least a little bit. Gold and reals tend to be negatively correlated, of course.

Here’s a short excerpt from the note, which captures the gist of Kolanovic’s view:

Following the recent selloff, we expect the market to trade in a broader range, but medium-term remain negative as headwinds for markets are getting stronger and tailwinds weaker, in our view. Still rich equity valuations face increasing risk from high real rates and cost of capital, while earnings expectations for next year appear overly optimistic. Weakening PMI momentum suggests that Q3 earnings growth is likely to be negative, while softening corporate pricing could lead to a squeeze on margins. Lags in the impact of high rates are longer this time, but we believe most of the negative effects are still to come. Delinquencies in consumer loans and corporate bankruptcies are starting to move higher, and this trend is likely to continue absent a cut in rates. The flare up of geopolitical risks adds another headwind and increases tail risks for markets and economic activity. Our outlook is likely to remain cautious as long as interest rates remain deeply restrictive, valuations expensive and the overhang of geopolitical risks persists.

Again: Different month, same risks.