JPM | US MACRO THEMATICS - Worst Ceasefire Ever, but Who Cares?

Research evidence excerpt

JPM | US MACRO THEMATICS - Worst Ceasefire Ever, but Who Cares?

Specialist Sales

US Specialist Sales J P M O R G A N

09 July 2026

globally while gross flows were slightly positive (+0.2z) DoD across our prime books. The go-forward in the market from here

should therefore be taken from a new lens, not an old one. The correlation of oil and interest rates (inflation/macro risk) will not

be the same as it was during the heat of SoH blockage. This is because the prior correlation between yields and oil was grounded

in worry of severe shock. The bond market (and broader FX) 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,

the market was pricing in oil-related macro 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 the rally. The UAE departure

from OPEC+ and new pipeline builds circumventing the Strait will help blunt the acute upside associated with prolonged

SoH closure.

The dominant near-term market driver therefore isn't geopolitical, it's the imminent Q2 reporting cycle. Strong prints and

upward guidance revisions are the likely outcome (corporate management is arguably more inclined to lift forecasts today than

during the uncertainty-laden April/May window), yet the concern is that even robust deliveries may fall short of what the

market has already priced in. Samsung provided a perfect example of precisely what could go wrong. The mood heading into

Q1 reports was defensive and skeptical, keeping the hurdle low. The current backdrop is the polar opposite, with expectations