JPM | US MACRO THEMATICS - Market Go Up, Market Go Down / KOSPI Blow-ups / Shifting Oil Dynamics / What to Keep an Eye On in Macro

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JPM | US MACRO THEMATICS - Market Go Up, Market Go Down / KOSPI Blow-ups / Shifting Oil Dynamics / What to Keep an Eye On in Macro

Specialist Sales

US Specialist Sales J P M O R G A N

07 July 2026

Things on my mind OUTSIDE of Memory-related rotations

Shifting dynamics within oil prices (Supply vs. Demand Driven, and why it matters):

JPM’s Energy Specialist Brendan Henrici has alluded to this in recent dailies (here and here) and his tactically bullish call on

commodities in Q3 (here), but there is a growing argument to be made for a modest bounce in oil prices. In short, China will

eventually have to return to the market right at a time when the consensus has shifted from bullish to bearish oil (expressed in

both sentiment and positioning) - that is quite the dangerous combination.

Why does this matter for Macro? Because the correlation of oil and interest rates will not be the same as it was during the heat

of SoH blockage. This is because correlation between yields and oil was grounded in worry of severe shock from the supply side.

The bond market was pricing the risk of a potential situation in which OECD inventories drew down below dangerous levels,

pushing oil prices parabolic and prompting an inflationary spiral. In other words, bonds were pricing in oil tail risk. While a

move higher in oil prices will apply moderate pressure to yields via the inflation transmission mechanism, there are a variety of

forces equally working against this demand. The UAE departure from OPEC+ and new pipeline builds circumventing the

Strait will help blunt the acute upside associated with prolonged SoH closure. For size, Brendan believes confirmation of

China returning to the market would move oil prices towards a $65-85 near/medium term range. Without China, this likely lives