JPMorgan predicts US economic slowdown due to trade policies and higher tariffs

From Yahoo Finance: 2025-06-25 10:06:00

JPMorgan analysts predict U.S. trade policies will slow global economic growth and raise inflation, with a 40% chance of recession in the second half of 2025. Economic growth is expected at 1.3%, down from 2%, and stagflation fears loom due to higher tariffs. The U.S. dollar outlook is bearish.

JPMorgan expects U.S. Treasury demand to decline as U.S. debt market size grows. The term premium for holding U.S. Treasuries could rise by 40-50 basis points, though sharp yield increases are not expected. Treasury yields spiked in April due to market volatility, and two-year yields are projected to reach 3.5%.

The bank forecasts the Fed will cut rates by 100 basis points by spring 2026, later than market expectations of two 25-basis point cuts this year. A recession or sharper slowdown could lead to more aggressive cuts. However, JPMorgan remains optimistic on U.S. stocks due to consumer and economic resilience.

JPMorgan remains bullish on U.S. stocks, citing strong fundamentals and steady demand for Tech/AI sectors. They believe the market will hit new highs despite uncertainty, supported by systematic strategies and investor flows.



Read more at Yahoo Finance: JPMorgan sees tariff-induced US ‘stagflationary’ slowdown in 2025