JPMorgan's trading desk has turned bullish on stocks again after weeks of caution, as Treasury yields ease back from multidecade highs following softer inflation and employment data. The S&P 500 still closed the week with back-to-back gains, with a key services-sector report due next.
JPMorgan's trading desk has gone tactically bullish on the market again after weeks of staying cautious. The bank's traders cite a mix of improving macro fundamentals, consumer strength, earnings expectations, stabilizing bond yields and supportive technicals behind the call.
The benchmark 10-year Treasury note yield topped 5.3% last week, its highest level since 2002. The 30-year bond yield also reached levels not seen in 24 years. But yields eased from those highs later in the week, after the release of lighter-than-expected inflation and employment data.
JPMorgan's traders said bond yields stabilized after an earlier rapid move higher, alongside a sharp decline in October rate-hike expectations. They added that a broadening out of the market, which has concentrated around the yield moves, would likely need yields to hold steady or move lower.
According to CNBC, JPMorgan's traders still favor tech as a core long, noting the "AI theme is likely to persist." The desk also likes banks, citing a potential steepening of the yield curve and a favorable capital markets outlook.
Yields were little changed early Monday, but that could change once the Institute for Supply Management releases its September reading on the U.S. services sector. The report has the potential to send yields back toward those multidecade highs, or put downward pressure on rates.
Source: US Top News and Analysis
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