JPMorgan Strategists Say US Stocks Overplay Recession Risk
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US equities are pricing in a recession risk much bigger than credit markets, leaving room for a positive surprise, according to JPMorgan Chase & Co. strategists.
Stock volatility and credit spreads typically move in tandem but have started diverging this year as the S&P 500 slides over fears that President Donald Trump’s policies will derail economic growth. The S&P 500 is currently pricing a 33% probability of a US recession while credit is pricing in 9% to 12% odds, strategists including Nikolaos Panigirtzoglou and Mika Inkinen wrote in a note.