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During a pandemic is it best to go negative, or stay positive?

If you ask the Fed Chair Jerome Powell and the Federal Open Market Committee (FOMC), the unanimous answer to the prospect of negative interest rates is, well, negative. But while that opposition makes it “unlikely” that negative rates will be implemented in the U.S. in the near future, economists at Goldman Sachs wrote Tuesday that, “despite the steady message, the substantive argument for negative rates has strengthened.”

Negative interest rates have long drawn skepticism from analysts (especially when looking at Europe) as a means to stimulate demand for credit and help the economy, but even while the Fed points to concern that negative rates harm banks and hurt lending, “most research finds that rate cuts below zero do ease financial conditions,” economists at Goldman write, thereby stimulating the economy.

In fact, the firm notes that, “Under our expectations for the economy, the Fed’s standard monetary policy rules would call for quite negative rates.” Those expectations for the economy now include a massive 39% drop in GDP in the 2nd quarter, while the firm estimates unemployment will hit 25%, up from 15%.

All told, Goldman says it’s “skeptical that forward guidance and asset purchases can fill the gap, barring a dramatic foray into risky assets for which the Treasury (and ultimately Congress) would need to provide a lot more equity capital.” Put bluntly: “While the Fed’s attitude has not changed, circumstances have,” the economists write.

Indeed, with the Fed having taken an everything-and-the-kitchen-sink approach to the economy and markets (or, as Randy Frederick, the vice president of trading and derivatives at Charles Schwab, recently told Fortune, a “blank-check Fed” approach), some say the markets have already been pricing in low or negative rates into next year.

“While we agree that the Fed is unlikely to push U.S. interest rates into negative territory, what is clear is that rates are set to stay lower for longer,” Mark Haefele, chief investment officer of Global Wealth Management at UBS AG, wrote in a note this week.

Despite pressure from President Trump via a tweet on May 12 that negative rates might be a “gift,” the Fed has thus far remained unmoved: “This is not something we’re looking at,” Powell said in a video conference with the Peterson Institute for International Economics last week.

Goldman suggests for the Fed to consider reversing its policy and cutting rates negative, a few things need to happen: the recession would have to hit a point where weak demand—not the virus—is the “main economic problem”; the hefty fiscal response would have to “fizzle” while unemployment remains high; and any escalation in asset purchases would have to “lose appeal for one reason or another,” the firm notes.

In the meantime, amid the current backdrop, “investors will need to consider strategies to improve the yield in their portfolios,” notes UBS’s Haefele.

Those strategies may include riskier credit like U.S. high yield bonds (where spreads of 778 basis points over Treasuries “more than compensate” for default risks, UBS notes), or U.S. investment grade and emerging
market USD sovereign bonds, the firm points out.

More must-read finance coverage from Fortune:

—Saving lives vs. saving the economy is a false tradeoff, economists say
—Real unemployment rate soars past 24.9%—and the U.S. has now lost 33.5 million jobs
—17% of unemployed workers aren’t looking for work—and that’s warping the official unemployment rate
—Does Apple’s stock buyback strategy make sense in this market?
—Goldman Sachs doubts there will be a Round 3 of PPP loans for small businesses
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: Why the banks were ready for the financial impact of coronavirus

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