By Senad Karaahmetovic
It seems JPMorgan's market strategists, see the light at the end of the tunnel for equities. In a note sent to clients yesterday, the strategists said they believe the global central banks are close to finalizing one of the most aggressive interest rate hiking cycles in recent memory.
“The pace of central bank tightening has likely peaked,” they wrote to clients.
They expect the Fed to deliver a widely-anticipated 75bp rate hike this week, followed by a 50bp rate hike at the December meeting before delivering the final 25bp hike in the first quarter of the next year.
“At this point, only the BoJ will be moving with an expected adjustment in its YCC,” they added.
Equities are likely to get support from the nearing Fed pivot, as well as from the disinflation phase, which has already begun according to the strategists. More importantly, bond yields are also likely to be capped by growth given that the economic activity is now “closer to contraction territory.”
“Bond yields peaking could go a long way in helping the equity market stabilize,” they concluded.