JPM EM Corporate Strategy Daily

Research evidence excerpt

J P M O R G A N

Global Credit Research

11 August 2026

JPM EM Corporate Strategy Daily

Our commodity team suggests that the upcoming Fed hiking cycle is more

likely to resemble the 2022-2023 experience for commodity prices than the

more typical historical pattern of positive returns during tightening (link).

The JPM house view has recently shifted to December 2026 as the base case for

a Fed rate hike, with September remaining a risk if inflation accelerates.

Historically, commodities have delivered positive returns during Fed hiking

cycles, but the 2022–2023 cycle was an exception, with the sector falling sharply

as Russian supply risk premiums unwound and manufacturing headwinds

intensified. The 2022/23 cycle was marked by elevated commodity prices driven

by supply-side disruptions, notably the Russian invasion of Ukraine, but these risk

premiums eroded as supply chains proved more resilient than anticipated. Despite

recession fears not materializing, global manufacturing PMIs slumped,

reinforcing bearish commodity price action. The current environment, while

reminiscent of the 1999 mid-cycle Fed hike, is more akin to 2022, with renewed

inflationary pressures and ongoing supply chain disruptions—particularly through

the Strait of Hormuz—keeping the BCOM Index near 1Q22 highs. The team warns

that any upcoming hiking cycle, even if smaller in magnitude, risks a depressive

cooling across the commodities sector if supply-disruption premiums unwind

amid tighter financial conditions.

Their base case for Brent crude oil remains fundamentally bearish over the

next 12 months, with prices expected to average $80/bbl in 4Q26 and oversupply in 2027 sending Brent prices to an average of $63/bbl in 2027. This

forecast is highly dependent on a gradual recovery in Middle East supply and

eventual inventory normalization, particularly flows out of the Strait of

Hormuz. They also note that each additional month of ongoing conflict and lowerthan-expected flows out of the Strait of Hormuz adds roughly $7-8/bbl to the fair

value of Brent crude. If disruptions extend to three months, monthly average prices

could rise to around $114/bbl.…