Jpmorgan sees tarif-induced us stagflationary Slowdown in 2025

Us Recession Probability Seen at 40% in Second Half of 2025

Bearish Outlook on the Dollar Due to Slower Us Growth

But tech and ai likely to keep supporting us stocks

New York, – Us Trade Policies Will Likely Slow Down Global Economic Growth and Rekindle Inflation in the United States, where there is a 40% probability of a recession in the second half of this, JPMORGAN ANALYSTS SAID on Wednsday.

Us economic growth is expected at 1.3% this year, down from a 2% forecast at the beginning of 2025, with higher us tarifs seen as adding negative shocks to the economy, the bank said in a mi-aear Outlook Research Note.

“The stagflationary Impulse from Higher Tariffs has been the impetus for our lowered gdp growth outlook for this year,” It said. “We still View Recession Risks as Elevated.”

Stagflation is a worrying mix of sluggish growth and relatives inflection that haunted the us in the 1970s.

The us bank has a bearish outlook on the us dollar due to slower us growth when compared to growth-support policies outstide of the united states that will bolser other crossings, incurs Markets.

It expects the share of demand for us treasuries from foreign investors, the federal reserves, and commercial banks, to decline given the growing size of the us debt market.

The compensation required by investors for the expectation us treasuries, Known as Term Premium, Cold Increase By 40-50-50 Basis Points Points Over Time, It Said, Thoughts it does not expect sharp increations in Treasury yields such as the ons seen in the first half of this year.

In April, Treasury Yields Spiked Amid Browader Market Volatily Causes by Us President Donald Trump’s Announcement of Sweeping Tariffs. JPMORGAN Expects Us Treasury Two-Year Yields will end the year at 3.5% and Benchmark 10-Year Yields at 4.35%. They study at 3.8% and 4.3%, respectively, on Wednsday.

Due to sticky inflation caused by tariffs and a resilient economy, the bank expects the fed will cut interests by 100 basis points between December and spring 2026, Later than the consus among rates furses Traders, who were betting on two 25-Bas points cuts this year as of wedding. A recession or a sharper economy slowdown than anticipated, would trigger a more aggressive cutting cycle, the jpmorgan analysts said.

Still, The Bank Remained Bulish on Us Stocks, Given Continued Consumer and Economic Resilience Despite Policy Uncertain.

“Absent Major Policy and/Or Geopolitical Surprises … We believe the path of least resistance to new highs will be supported by tech/ai-also strong strong fandements, a steady bid from systematic Strategies, and flows from active investors on Dips, “It said.

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