JP MORGAN CHASE(US:JPM)2025-12-10 12:16Investment Rating - The report maintains a positive outlook on global equities into 2026, particularly emphasizing the U.S. AI Supercycle as a key investment theme, with a target for the S&P 500 at 7,500 by year-end 2026 [5][27][28]. Core Insights - The year 2026 is expected to be characterized by uneven monetary policies, rapid AI adoption, and increasing polarization in equity markets, particularly between AI and non-AI sectors [5][7]. - Global growth is projected to remain resilient, supported by monetary and fiscal easing, with GDP growth expected to be 2.5% in 2026, slightly down from 2.7% in 2025 [14][27]. - Inflation dynamics in the U.S. are anticipated to remain sticky, with core PCE expected to be 3.1% [14][27]. - The Federal Reserve is expected to implement selective easing, with two further 25 basis point cuts anticipated in December 2025 and January 2026 [15][32]. - The report highlights diversification opportunities in the Euro area, China, and emerging markets, driven by fiscal stimulus and healthy corporate balance sheets [27][28]. Summary by Sections Economic Outlook - The global economic outlook for 2026 is projected to be resilient, with a GDP growth forecast of 2.5% and a slight decrease in inflation to 2.8% [14][27]. - The U.S. economy is expected to maintain a growth rate of 2.0%, while the Euro area is projected to grow at 1.3% [14][27]. Monetary Policy - The report anticipates further easing from the Federal Reserve, with a focus on selective cuts across developed markets [15][32]. - The Fed is expected to pause after delivering 50 basis points of cuts, with a target for the 10-year Treasury yield at 4.25% by mid-year 2026 [32]. Equity Markets - The report remains positive on global equities, particularly in sectors benefiting from AI, with a target for the S&P 500 at 7,500 by the end of 2026 [27][28]. - There is a noted polarization in equity markets, with a divergence between AI and non-AI sectors [5][7]. Fixed Income - The report suggests a range-bound yield environment for developed market rates, with a focus on tactical carry trades in Euro rates [32][33]. - The outlook for U.S. high-grade credit is positive, with expectations for outperformance in the Euro high-grade market [33]. Commodities - A bearish outlook on oil is maintained, with Brent prices expected to average $58 in 2026, while a bullish outlook for gold targets $5,000 per ounce by 4Q26 [34].