The J.P. Morgan View: Brent Softens, Jobs Bend: Fed Pressure Eases, Yen Gets a Shield

Research evidence excerpt

J P M O R G A N

Global Markets Strategy

07 August 2026

The J.P. Morgan View

Brent Softens, Jobs Bend: Fed Pressure Eases, Yen

Gets a Shield

Geopolitics turned incrementally more constructive over the past two

weeks. Headlines pointing toward a deal to restore full transit in the Strait

of Hormuz compressed the oil risk premium, with Brent retracing toward

~$80-85/bbl from ~$100/bbl. Lower oil prices accelerated the repricing of

DM hiking expectations, with money markets validating a patient,

gradual normalization path. We now expect just one additional hike

across the G4 by year-end, and we see the BoJ delivering three more hikes

in 2027.

Cross Asset Strategy

The Fed stayed on hold at the July meeting with three hawkish dissents,

but the dominant signal came from Chair Warsh’s communication, which

weakened the Fed’s inflation anchoring credibility, initially triggering a

twist steepening of the UST yield curve and higher inflation breakevens.

Nikolaos Panigirtzoglou

Casting doubt on PCE as the anchor reads like “moving the goalposts” of

inflation targeting. The risk is that Warsh’s task forces may endorse an

alternative inflation measure, further blurring the reaction function. Our

baseline is that the FOMC will ultimately assert its inflation mandate with

a hike in December 2026 (pulled forward from 2H27). The July

employment survey in US delivered a soft reading with the notable

exception of the unemployment rate moving to 4.1% from 4.2%. The 3M

moving average of private payrolls at 40k is consistent with a low demand/

low supply labour market. The decline in the participation rate partly

contributed to the drop in UR; we believe the report takes hiking pressure

away from the Fed, reducing the chances of a September move, with the

focus on the forthcoming CPI prints.

On August 3rd, the Japanese and US governments confirmed coordinated

FX intervention to strengthen JPY. Authorities are drawing a line against

“excessive yen depreciation” around USD/JPY ~160, with added concerns

that JGB volatility could spill into the Treasury market.

US/Japan coordination should cap the risk of USD/JPY pushing

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