JPMorgan’s technique workforce, led by Fabio Bassi, expects a difficult second half of 2025 as markets navigate between conflicting forces. On one hand, the U.S. financial system faces headwinds from commerce insurance policies and a shift away from earlier “exceptionalism” themes towards recession considerations. On the opposite, underlying financial fundamentals stay strong with restricted credit score imbalances and managed inflation impacts from tariffs.
The strategists spotlight a puzzling disconnect: volatility measures just like the VIX have collapsed whereas financial coverage uncertainty stays elevated, suggesting markets are resilient quite than complacent. They preserve a combined outlook – bullish on threat property short-term (supported by AI developments and better charges), bearish on the greenback, and cautious on gold. The important thing threat stays a recession state of affairs the place commerce wars injury shopper spending sufficient to drive aggressive Fed easing.
