HomeFinancial MarketsJPMorgan Expects Fed Announcement to Boost Stocks

JPMorgan Expects Fed Announcement to Boost Stocks

JPMorgan Chase & Co.’s trading desk expects Wednesday’s most likely Federal Reserve decision to lift stock prices. The New York City-based bank expects the central bank to adopt a “Hike and Pause” approach, whereby it would hike interest rates in July before pausing next month.

Team leader Andrew Tyler wrote that his team expects this approach to push stocks on the S&P 500 up to 0.75% higher. They have assigned a 65% chance for the Federal Reserve to hike interest rates on Wednesday before pausing next month. This is more than double the probability of a scenario where the Fed continues to hike rates continuously over the coming months.

“We think the Hike & Pause scenario is more likely with potential upside risks that the Fed may confirm the end of the cycle earlier at Jackson Hole,” the team from JPMorgan Chase & Co wrote in a note, speaking of the Kansas City Fed’s annual policy forum scheduled in late August.

“Any language that the market interprets as the Fed may pause after one hike,” the statement continued, adding that the disinflationary process is advancing quicker than expected.

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