JPMorgan remains constructive on global equities through year-end, anticipating a gradual upward trend driven by sector rotation rather than a broad-based surge, according to strategist Fabio Bassi.
The bank expects a 'grind higher with rotation' as positioning and dispersion among stocks take precedence, supported by Federal Reserve policy patience that suppresses volatility. A rebound in semiconductor equities is viewed as a tactical improvement in risk appetite, while the bank favors quality growth names and hyperscalers amid recent repricing.
Long-end government bond yields have risen sharply, accompanied by renewed steepening in developed market yield curves. JPMorgan attributes this to supply-side 'crowding out'—where hyperscaler capital expenditure competes with sovereign issuance—and higher real returns on investment driven by growing confidence in AI monetization. The bank does not interpret the move as a policy-error signal but rather as a reflection of increased demand for capital and investment opportunities.
JPMorgan expects only a modest further increase in term premiums, suggesting the shift in yields is unlikely to trigger a broad risk-off episode. The Treasury’s expanded 10-year and 30-year bond buyback program indicates discomfort with elevated long-term yields, though the bank does not anticipate Jackson Hole resolving the debate over the Fed’s reaction function.
