JPM US Market Intelligence Afternoon Briefing Sept 16

IDEAS & INSIGHTS – IN BRIEF • THOUGHTS ON FED TODAY – Thoughts from US Market Intel (with an updated Fedspeak calendar), JPM Econ (Feroli) and JPM FX Strategy. • US MKT INTEL VIEW – We maintain our Tactically Cautious / Neutral view into the Fed, plus we update the Monetization Menu

AFTERNOON UPDATES (NEWS LINKS) • SPX -0.4%, NDX +0.0%, RTY -0.4%. WTI -321bps at $102.43, NatGas -96bps to $2.89, UK NatGas -250bps to £1.9345, Gold -0bps to $4,264, Silver +0bps to $62.98, 10Y @ 5.023%, and VIX @ 17.71. • US: Stocks closed lower as Warsh’s press conference triggered a ~1% intraday swing. 2Y moved from -6bp to +6bp during the Fed release and press conference, a 12bp move higher in yields, while 10Y moved from -6bp to 0bp. Financials, Regional Banks, Momentum Laggards and Housing were among the worst performing baskets, along with Energy (which was triggered by the 3.2% decline in WTI crude). On the other hand, Semis and AI baskets held relatively well. Dollar added 70bp amid the continuous constructive outlook from the Fed on the US economy/growth. See below on our views on Fed day, a calendar for upcoming Fedspeak and views from JPM Research. • EU/UK: Major markets closed higher led by Italy. Thematically, Semis, Renewables, AI Data Center, Momentum Long, Ceasefire and Luxury were among the top performing baskets. The move lower in yields and oil supported most European sectors ahead of Fed release after market close.

CATALYSTS TOMORROW (FULL WEEK CALENDAR)

• US MACRO DATA TOMORROW: Philly Fed Business Outlook, Initial/Continuing Jobless Claims, Housing Starts and Building Permits at 8.30am ET. Pending Home Sales at 10am ET. • US EARNINGS TOMORROW: HUBG, IPHA, YRD, IH, CMMB, SMXT • GLOBAL MACRO DATA TOMORROW: (Eurozone) CPI/PPI (revision) at 5am ET. (UK) Bank of England Bank Rate at 7am ET. (UK) GfK Consumer Confidence at 7.01pm ET. (Japan) CPI/PPI at 7.30pm ET.

JPM MARKET INTEL EQUITY & MACRO NARRATIVE

THOUGHTS ON FED TODAY • US MKT INTEL – [We blasted below in IB chats after around 3pm ET] Ultimately, if he is serious about 2% then DOTS are materially wrong or the economic forecast is too optimistic. I would interpret this as DOTS are too low. Consumer have cash and are spending. Businesses are in solid-to-great shape. Capex, the primary driver of GDP growth is not stopping any time soon. That said, if the Fed is comfortable with sub-3% but above-2% core inflation, which appears to be the case … a de facto changing of the target from 2% to 2.5%, then future Fed actions will be digested easily by markets. The last Core CPI print was 2.45%. For markets, today does not relieve uncertainty and think Fedspeak next week will be more informative. Warsh has previously supportive stacking hikes earlier in a cycle which would point to an Oct hike and if he is bulled up on the economy and thinks AI disinflation kicks in later this year or 2027, then Oct or Dec ends this hiking cycle. For now, think you want to remain CAUTIOUS on markets with longs in Tech and short SMid-Caps and some Int’l given the moves in the USD and relatively growth outlook. The press conference points to further hikes, likely more than are being forecasted by the Dots. They flag the resilient domestic spending, reinforced by today’s Retail Sales print. They flag productivity growth and capex. The Fed is forecasting 1x more hike in FY26 and then zero hikes in FY27; Fed sees GDP remaining above trend for the next 3.25 years with unemployment stable at 4.1%, and Core PCE returning to 2% in 2029. {DOTS <GO>} show 1x add’l hike in 2026 but no hikes in FY27. the Fed sees Core PCE at 2.5% for YE27. Our colleague Steve Bruner queries that if the Fed is committed to crushing inflation and they see inflation 50bps above their target in 15 months but in 12 of those 15 months they forecasting to do nothing, are they really committed? o UPCOMING FEDSPEAK SCHEDULE ▪ Bowman (SEP 18 9:30AM)