JPM International Market Intelligence | Morning Briefing

20 SECONDS: Cautious stance, Global Narrowing & Tech Broadening. USDJPY positioning reset. We must pace the frontier. Taylor rule guides policy rates roughly 100bp higher. Positioning’s Poem.

• Asia is mixed, with US/EU futures in the red. Calls for tighter AI oversight and slower frontier development are weighing on the broader Tech sector, while Saudi Arabia’s suspension of operations on the East-West pipeline following drone attacks is boosting oil prices (potentially by up to $20/bbl if operations do not restart within a few days). USDJPY has stabilised after a material positioning reset.

• Ahead of Fed, BoE and BoJ meetings, JPM’s Kasman discusses the broadening DM hiking cycle and notes that the Taylor rule points to DM policy rates roughly 100bp higher.

• We retain our views on Global Narrowing, Tech Broadening & Gold.

• The key incremental news came from AI. Amodei’s essay called on the industry to slow the pace of frontier development.

• Recursive self-improvement, “left unchecked, could outrun our ability to understand and control these systems.” Meanwhile, the OpenAI–Hugging Face incident was a warning shot: “In 6–12 months, a swarm of more capable but similarly misaligned agents could take over the entire internet, potentially causing hundreds of billions of dollars in damage.”

• The plan to pace the frontier combines embedded evaluators with coordination among labs and governments.

• There is probably some truth to the pushback—shaping the regulatory landscape, curbing open weights, pre-IPO marketing etc. —but the concerns are shared by other industry leaders and a growing share of government.

• I would not expect a material slowdown in AI infrastructure/bottleneck earnings. This is not a halt: the benefits for growth, healthcare and democracy still outweigh the tail risks; AI adoption and token trends remain intact; excessive slowing risks ceding leadership in AI; and the administration remains pro-AI.

• Key Catalysts incl. BRICS Summit (Xi & Putin to attend); Ukraine Action Summit held in Washington; G20 energy ministers meet in Houston; China macro data; UK labour market data & CPI; Bessent to appear before House Financial Services Committee; BCB FOMC, BOE, BOJ rate decisions; US retail sales; EU’s von der Leyen delivers State of the Union address; NATO’s Military Committee Conference begins.