Bullish indicating open at $55-$60, IPO prices at $37
Investing.com -- Bond yields and the U.S. dollar are likely to continue their downward trajectory as markets increasingly price in interest rate cuts by the Federal Reserve, according to JPMorgan analysts.
In their latest equity strategy note, the bank said investor attention has shifted toward the timing and implications of expected monetary easing in the second half of 2025.
“Judging from the incoming queries, investors are refocusing on the timing and the likely impact of the potential Fed cuts in 2H,” JPMorgan wrote.
The bank explains that the Fed futures market now reflects more than 64 basis points of cuts, roughly two full rate reductions, by year-end, with September and December as the likely windows.
The note added, “The pricing in of cuts has accelerated in the past couple of weeks, during which an extra 18bp of easing was added.”
JPMorgan sees the most constructive scenario for markets as one where the Fed cuts rates amid “resilient growth [and] subdued inflation,” calling it a “Goldilocks” environment. In this case, they added, “USD might be unexciting.”
However, the bank’s base case is a mix of two less favorable outcomes: economic slowdown coupled with inflation pressure driven by tariffs.
In such a scenario, “bond yields are likely to keep moving lower,” and “our call is to stay bearish USD.”
JPMorgan believes this setup should favor emerging market equities, reiterating its overweight stance. It also noted that sectors such as Utilities, Staples, Healthcare, and IT tend to outperform during easing cycles, while Financials typically lag.
The firm continues to advise caution in Europe, maintaining a more defensive regional allocation strategy.