US Macro Thematics

Equities and fixed income are currently diverging in their expectations for the Federal Reserve. While small caps have outperformed recently due to sector rotation and falling oil prices, bond markets continue to price in aggressive rate hikes.

Key Takeaways

• 1.A dangerous divergence exists where equities are pricing in relief while fixed income markets are pricing in a more hawkish Fed.
• 2.Small cap outperformance is historically significant but fundamentally stretched, driven by AI capex diffusion into industrials/power and optimism over oil prices.

Table of Contents

• US Market Thematics – Specialist Sales Commentary
• Current CTA Levels
• JPM Global Macro Research
• J.P. Morgan - Market Strategy & Macro Contacts

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