Week in review
- U.S. Feb headline and core CPI slowed to 2.8% and 3.1% y/y respectively
- U.S. JOLTs job opening rose to 7.7mil
- Japan headline wage rose 2.8% y/y
Week ahead
- U.S. Federal Reserve interest rate decision
- China Jan-Feb activity
- Bank of Japan interest rate decision
Thought of the week
Fear of recession spooked equity market last week, with the VIX surging to an 89th-percentile high at 27.9 and the S&P 500 index tumbling into its first 10% correction in almost two years. However, the Fed’s recession risk model, through the lens of excess bond premium (EBP) in credit markets, indicates a less concerning outlook. Indeed, while the ongoing policy shifts under the Trump administration have increased uncertainty for businesses and markets, the latest economic data suggests that a recession in the U.S. appears less likely to materialize than feared. Looking back, the current level of correction is nothing new to equity markets. 24 of the past 45 years have witnessed more severe drawdowns, yet these years have ultimately yielded an average return of +5%. Furthermore, a backloaded year of pro-growth agenda, from tax cuts to deregulations, sheds light for a supportive backdrop as the year progresses.
VIX index and Excess Bond Premium Implied Probability of Recession
index level, percent
Source: Bloomberg, CBOE, FactSet, Federal Reserve, JP Morgan Asset Management. Data reflect most recently available as of 14/03/25.
Market data
0903c02a82467a72
All returns in local currency unless stated otherwise.
Currencies’ return are based on foreign currencies per U.S. dollar. An appreciation of the foreign currency against the U.S. dollar would be positive and a depreciation of the foreign currency against the U.S. dollar would be negative.
For more information, please call or email us. You can also contact your J.P. Morgan representative.