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    1. Guide to the Markets

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    Guide to the Markets

    Updated each quarter, the Guide to the Markets illustrates a comprehensive array of market and economic trends and statistics through compelling charts.

    Key themes for Q3 2022

    Karen Ward, Chief Market Strategist, previews this quarter’s themes and invites you to use the Guide to help navigate the investment landscape.

    Persistent inflation, persistent volatility

    Elevated inflation remains at the centre of market volatility, with investors increasingly concerned that central banks will need to slam hard on the monetary brakes. The combination of higher consumer prices and interest rates will likely cause economic activity to slow during the second half of the year, and our recession monitors should be closely tracked (Guide to the Markets – UK pgs 14 & 25).


    Stock markets have already priced in a lot of bad news

    Slowing demand and rising costs will put pressure on corporate earnings (pgs 47 & 51). However, most major markets have already experienced double-digit declines, suggesting that a significant deterioration in earnings is already priced in (pg 65). Despite strong outperformance year-to-date, value stocks still have more scope for upside relative to growth stocks in the coming 12 to 18 months, in our view (pg 52). 


    Falling inflation would ease the pressure on central banks and bond markets

    So long as inflation moderates alongside slowing activity, central banks should be able to ease back from their extreme hawkish rhetoric in the first half of 2022 (pgs 7 & 10). Bond yields could still rise further but risks are now more balanced and, after such a significant reset, bonds are more attractive than they were at the start of the year (pgs 67 & 73). 


    Humility in forecasting, balance in portfolios

    Significant uncertainties remain, not least the timing of the inflation peak and the central banks’ patience in allowing inflation to persist above target (pg 8). Europe would also face a very challenging winter if its gas supply from Russia is disrupted (pg 32). Portfolios can benefit from balance, as well as allocations to macro funds (pg 77), core real estate and infrastructure (pg 78) to bolster against recession and inflation risks.  


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    The Market Insights programme provides comprehensive data and commentary on global markets without reference to products. Designed as a tool to help clients understand the markets and support investment decision-making, the programme explores the implications of current economic data and changing market conditions.

     

    For the purposes of MiFID II, the JPM Market Insights and Portfolio Insights programmes are marketing communications and are not in scope for any MiFID II / MiFIR requirements specifically related to investment research. Furthermore, the J.P. Morgan Asset Management Market Insights and Portfolio Insights programmes, as non-independent research, have not been prepared in accordance with legal requirements designed to promote the independence of investment research, nor are they subject to any prohibition on dealing ahead of the dissemination of investment research. This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own professional advisers, if any investment mentioned herein is believed to be suitable to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not a reliable indicator of current and future results. J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our EMEA Privacy Policy www.jpmorgan.com/emea-privacy-policy. This communication is issued in Europe (excluding UK) by JPMorgan Asset Management (Europe) S.à r.l., 6 route de Trèves, L-2633 Senningerberg, Grand Duchy of Luxembourg, R.C.S. Luxembourg B27900, corporate capital EUR 10.000.000. This communication is issued in the UK by JPMorgan Asset Management (UK) Limited, which is authorised and regulated by the Financial Conduct Authority. Registered in England No. 01161446. Registered address: 25 Bank Street, Canary Wharf, London E14 5JP.

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