JPMorgan's Priya Misra: Higher oil prices for longer will drag on growth

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JPMorgan 9.0
Investment Bank $3170.00B
Priya Misra 9.0

JPMorgan's Priya Misra: Higher oil prices for longer will drag on growth

WTI

yields

The rates market is viewing this simply as an inflation shock globally... global rates have risen. Describes current market pricing driven by oil price shock. Her own view is that this rise is a short-term shock and that Fed cuts will eventually cap yields.

3/5/2026 1:17:37 AM	short term cautious up	5 days later	+1.81%	+0.91%
2/6/2026 5:06:02 PM	medium term cautious down	21 days later	-3.57%	+1.79%
12/11/2025 1:18:26 AM	short term down	5 days later	-1.03%	+1.03%
12/10/2025 9:25:29 AM	medium term cautious down	20 days later	+0.53%	-0.27%
12/1/2025 2:17:57 PM	medium term up	20 days later	+2.03%	+2.03%
11/21/2025 1:54:47 PM	medium term up	21 days later	+3.57%	+3.57%
11/7/2025 6:12:18 PM	medium term cautious down	21 days later	-0.34%	+0.17%
11/4/2025 12:53:31 PM	medium term cautious up	20 days later	-3.73%	-1.86%
10/30/2025 1:40:41 PM	medium term cautious up	20 days later	+0.12%	+0.06%
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10/16/2025 5:42:00 PM	medium term cautious up	20 days later	+2.15%	+1.07%
10/1/2025 3:11:20 PM	medium term cautious down	20 days later	-3.30%	+1.65%
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9/22/2025 5:25:48 PM	medium term up	20 days later	-1.67%	-1.67%
9/17/2025 6:49:25 PM	medium term cautious down	20 days later	+0.61%	-0.30%
9/11/2025 11:57:02 PM	medium term cautious up	20 days later	+0.66%	+0.33%
9/11/2025 4:51:16 PM	short term down	5 days later	+0.37%	-0.37%
9/10/2025 9:53:06 PM	short term cautious down	5 days later	+0.37%	-0.19%
9/10/2025 6:33:02 PM	short term cautious down	5 days later	+0.37%	-0.19%
8/28/2025 1:07:30 PM	short term cautious down	5 days later	-0.38%	+0.19%
8/15/2025 9:10:00 PM	short term cautious down	7 days later	-1.52%	+0.76%
8/12/2025 4:29:28 PM	medium term cautious up	20 days later	+0.92%	+0.46%
8/8/2025 2:04:22 AM	short term cautious down	7 days later	+1.59%	-0.80%
8/4/2025 11:59:32 PM	short term down	6 days later	+1.84%	-1.84%

Show all yields results

Introduces topic: rising oil prices have investors cutting Fed rate cut expectations, with markets pricing only ~30bps of cuts for the year as bond yields rise globally.

speaker2
Asks Priya Misra: Yields have migrated to the top of their range. Is this an inflationary story, something else, and where does it head from here?

speaker2
Priya Misra

The rates market views this as a global inflation shock. A geopolitical risk-driven rise in oil prices is a stagflationary shock. The market is myopically focused on the inflation side, but high oil prices are also a tax on the consumer and will be a drag on growth if sustained.

Consumer has been drawing down savings, leaving little buffer.
Priya Misra

I don't think any central bank, particularly the Fed with its dual mandate, is likely to not cut rates. We still think the Fed is likely to cut rates later this year.

We are in a low, high, or low-fi labor market. Headline inflation will likely rise, but underlying inflation trends are actually slowing. This feels different from 2022, but the market has PTSD from that period.
Priya Misra

This is an opportunity. Value is being created in bonds. Owning short-duration Treasuries is a hedge against growth slowing and credit fears.

Treasuries provide liquidity and hedge properties.
Asks about opportunities in bonds, referencing historic corporate investment-grade bond issuance and whether data center-related paper will cause prices to go down.

speaker2
Priya Misra

Despite credit fears and heavy supply, new issue concessions were not high and post-pricing performance was excellent. There are inflows into investment-grade bond funds.

People are looking at all-in yields of 5.5-6%. For AI-related supply from hyperscalers, we like those business models because they don't have much debt. Market demand for credit is healthy, with books highly oversubscribed.
Notes that corporate supply also indicates demand. Asks about the Fed: market still leaning toward a cut, but recent data points to a 'wait and see' Fed.

Looking at CPI translating to PCE, it's still elevated.

speaker2
Priya Misra

Upcoming Fed meeting will be 'wait and see'. There's a clear division at the Fed between those nervous about employment and those worried about inflation; the stagflationary shock has strengthened that division.

The Fed has cut a reasonable amount in the last two years, so they have the luxury to wait. Historically, the Fed looks through oil shocks. Long-term inflation expectations have been well-behaved. The market is saying this is a short-term energy shock in an otherwise healthy economy.
Priya Misra

The dot plot will likely signal further rate cuts because the majority of the committee still thinks policy is slightly restrictive. As long as the Fed signals a path towards cutting rates, that will cap how high the 10-year yield can go.

Maybe we push out the cuts from 2026 to 2027, but the market is forward-looking.

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