Strait Risk to Market Risk: V-Shaped Rebound, Narrow Runway: IMF and World Bank Midyear Outlook: All into Account Podcast

Research evidence excerpt

Strait Risk to Market Risk: V-Shaped Rebound, Narrow Runway: IMF and World Bank Midyear Outlook: All into Account Podcast

23 July 2026

Note that some of the views in this summary represent the perspectives of the external

speakers and are not necessarily the opinions of J.P. Morgan Research analysts.

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Five trends to watch for 2H26: Adverse

scenarios, energy shocks, AI optimism,

fiscal constraints and higher rates

The IMF and World Bank frame their outlook around competing forces: downside

risks from energy security pressures, higher fiscal costs, and higher-for-longer

rates versus upside potential from AI capex investment and stronger positioning

along the technology value chain. While the rebound from the Iran conflict can be

characterized as V-shaped and stronger than expected, confidence is increasingly reliant

on market performance. The second half of the year has so far seen heightened market

volatility, with the S&P 500 trading in a volatile range after Q1 2026 earnings were the

strongest since 2021. 10-year US Treasury yields are 23bp higher since June 30, while

the USD has remained stable with DXY at 101.

1. Tech-led demand tailwinds buffer geopolitics-driven supply shocks, but the

adverse scenario is more severe. A positive, demand-led technology impulse could

offset an energy-driven supply shock tied to the Iran conflict, but the balance of

risks remains skewed to the downside. The World Bank’s downside scenario is

materially more severe, with global growth falling to 1.3% and inflation rising to

4.4% this year.