JPMorgan: Fed cuts window closing
JPMorgan warned the Fed’s window for cutting rates in 2026 is narrowing as persistent inflation and mounting credit risks leave limited room for easing—analysts say oil‑driven shocks and credit stress are the key constraints. The note frames the dilemma as a trade‑off between tipping the economy into recession and letting inflation stick, stressing the shrinking probability of near‑term rate cuts. (thestreet.com)
In a client note dated Jan. 9, Michael Feroli, J.P. Morgan’s chief U.S. economist, wrote “we now expect the Fed to hold rates throughout 2026” and forecast the next policy move to be a 25‑basis‑point hike in Q3 2027. (jpmorgan.com (jpmorgan.com)) (jpmorgan.com) J.P. Morgan’s equity strategists led by Fabio Bassi cut their 2026 year‑end S&P 500 target to 7,200 from 7,500 on March 21, explicitly citing oil‑supply risks and weaker profit outlooks tied to the Strait of Hormuz disruption. (thestreet.com (thestreet.com)) (thestreet.com) Bloomberg reported that bond traders erased bets on Fed cuts in 2026 after an Iran‑related oil surge pushed short‑maturity yields higher and forced a rapid re‑pricing of expected easing on March 20, 2026. (bloomberg.com (bloomberg.com)) (bloomberg.com) JPMorgan tightened lending to private‑credit firms and marked down software‑linked loans on March 11 as part of preemptive moves to limit exposure to a roughly $1.8 trillion private‑credit sector, according to Bloomberg and CNBC reporting. (bloomberg.com (bloomberg.com)) (bloomberg.com) (cnbc.com (cnbc.com)) (cnbc.com) The New York Fed’s Corporate Bond Market Distress Index jumped in March to its highest reading since May 2025, signaling growing dislocations in investment‑grade credit markets that amplify policy‑risk for the Fed. (bloomberg.com (bloomberg.com)) (bloomberg.com) J.P. Morgan Asset Management’s summary of the March FOMC shows the median “dot” still penciling in one 25‑bp cut in 2026, even as market‑implied futures and JPMorgan’s own economists diverge—markets now price little‑to‑no easing in 2026 while JPMorgan projects the funds rate to be held at 3.50%–3.75% through the year. (am.jpmorgan.com (am.jpmorgan.com)) (am.jpmorgan.com) (bloomberg.com (bloomberg.com)) (bloomberg.com)
