JPMorgan: The real reason behind the Federal Reserve's expected interest rate cuts may not be Favourable Information for US stocks.

BlockBeats news, on June 30, market expectations for a rate cut by The Federal Reserve (FED) are rising, but JPMorgan's London strategy team has stated that the true reason behind the rate cut may not be favourable for the stock market and could even lead to a "wrong type of easing", triggering a chain reaction in the market. JPMorgan strategist Mislav Matejka pointed out that in the past few weeks, the market has already priced in an additional 18 basis points of rate cut expectations, but the key lies in the driving factors for the rate cut. They proposed three possible scenarios for the rate cut: the first scenario is that The Federal Reserve (FED) cuts rates due to a significant weakening of economic activity. The second scenario, which is the best "Goldilocks" outlook, is that economic growth remains resilient while inflation is controlled, which would not put pressure on consumer purchasing power. The third scenario is that even if some inflation pressure appears, The Federal Reserve (FED) chooses to cut rates, which "might be done against the backdrop of the US government's push for rate cuts." JPMorgan's strategists expect that the future will be some combination of the first and third scenarios - that is, economic activity slows but inflation rises. The strategists stated: "If this outlook becomes reality, we believe investors will be disappointed." They noted that since 1980, typically, the dollar weakens before a rate cut and continues to decline after the rate cut. Bond yields also decline accordingly. JPMorgan's strategists indicated that they expect the dollar to hit new lows in most cases, and US Treasury yields will continue to fall. (Jin10)