Stocks Drop 20% If Bonds Have Inflation Right in JPMorgan Model

The widening disconnect between stocks and bonds suggests a 20% downside risk for equities if bonds are proved correct in pricing inflation volatility.

  • JPMorgan’s model highlights how much investors across different asset classes are struggling to make sense of the market landscape since the pandemic.
  • Investors have also been blindsided in the currency market as the dollar has largely maintained its strength, going against expectations for the greenback to lose momentum as the Fed’s tightening cycle peaks.

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