Summary of Economic Outlook and Key Insights Industry Overview - The report focuses on the **US economy** and its outlook for 2026 and 2027, highlighting key economic indicators and potential risks and opportunities. Core Insights 1. **Economic Growth Forecast**: The US economy is expected to grow by **2.4% in 2026** and **2.2% in 2027**, driven by consumer resilience and fiscal stimulus from the OBBBA [1][11][25] 2. **Tailwinds for Growth**: Five main factors are identified as tailwinds for 2026: - OBBBA contributing **0.3-0.4 percentage points** to GDP growth [2][14] - Lagged effects of Fed rate cuts boosting activity in the second half of 2026 [2][16] - Supportive trade policies regardless of IEEPA tariff outcomes [2][21] - Continued growth in AI-related investments [2][24] - Base effects from the end of the government shutdown enhancing GDP growth [2][24] 3. **Inflation Projections**: - Headline PCE inflation is forecasted at **2.6%** and core PCE at **2.8%** for 4Q 2026, remaining above the Fed's target through 2027 [3][26] - Tariffs are expected to keep core PCE inflation above **3%** until 3Q 2026 [3][27] 4. **Labor Market Dynamics**: - The labor market is stabilizing, with job growth expected to average **50,000 per month** in 2026, and the unemployment rate projected to peak at **4.5%** before declining to **4.3%** by 4Q 2026 [4][38] - Immigration policy changes are impacting job growth, lowering the breakeven job growth rate to about **20,000 per month** [4][39] 5. **Federal Reserve Policy Outlook**: - The Fed is anticipated to maintain rates around **3.0-3.25%** by 3Q 2026, with potential for further cuts depending on labor market stabilization [5][43] - The next Fed Chair is expected to adopt a dovish stance, influencing future monetary policy [5][42] Risks and Opportunities 1. **Downside Risks**: - A potential labor market downturn could lead to reduced consumer spending and further job cuts [6][44] - A slowdown in AI investment could shock equity and credit markets, impacting consumption [6][46] 2. **Upside Risks**: - Additional fiscal stimulus, such as tariff refunds to consumers, could enhance growth and inflation [7][51] - The Fed may cut rates to **2%** despite a resilient economy, which could lead to financial repression [7][54] Additional Insights - The report emphasizes the importance of consumer spending, which has shown resilience despite labor market challenges [10][37] - The potential impact of the **men's soccer World Cup** on service prices is noted, indicating possible one-off price adjustments [28] - The report highlights the K-shaped nature of consumer spending, where higher-income households are driving spending growth [46][49] This comprehensive outlook provides a detailed analysis of the US economic landscape, identifying key growth drivers, inflation expectations, labor market trends, and potential risks that investors should consider.

J P M O R G A N Global Markets Strategy 26 November 2025 Global Inflation Outlook 2026 Inflation breakeven divergence Rates Strategy Francis Diamond AC (44-20) 7134-1504 francis.diamond@jpmorgan.com J.P. Morgan Securities plc Frida Infante (33 1) 8703 2581 frida.infante@jpmorgan.com J.P. Morgan Securities plc Phoebe White (1-212) 834-3092 phoebe.a.white@jpmorgan.com J.P. Morgan Securities LLC Liam L Wash (1-212) 834-5230 liam.wash@jpmchase.com J.P. Morgan Securities LLC Takafumi Yamawaki (81-3) 6736-1748 ta ...

Summary of Key Points from the Energy Outlook Conference Call Industry Overview - The report focuses on the energy sector, particularly oil and gas markets, with projections for 2026 regarding Brent and WTI crude oil prices, refining margins, and natural gas prices. Core Insights and Arguments 1. **Oil Price Projections for 2026** - Brent crude is expected to average $60 per barrel, while WTI is projected at $57 per barrel due to a surplus of 2 million barrels per day (b/d) in the oil market [2][9][20] - Oil demand is anticipated to grow by approximately 1 million b/d, with non-OPEC+ supply increasing by about 800,000 b/d [2][9] 2. **Geopolitical Risks** - Geopolitical tensions, particularly involving Venezuela, Iran, and Russia, pose significant risks to oil supply and prices [2][3] - The potential for a spike in prices exists if geopolitical tensions escalate, but a peaceful resolution in Ukraine could lead to lower fuel prices [3] 3. **Refining Margins** - Refining margins are expected to remain strong in 2026, with ULSD-Brent cracks projected at $32 per barrel and RBOB-Brent cracks at $17 per barrel [4][9] - Limited refining capacity additions and ongoing military tensions are likely to support these margins [4] 4. **Natural Gas Market Outlook** - US natural gas prices are projected to average $4 per MMBtu in 2026, with a potential spike in European TTF prices if cold weather occurs [5][9] - US gas supply is expected to increase by 2.5 Bcf/d, driven by rising LNG exports [5][9] 5. **Economic Growth and Demand** - Global GDP is forecasted to grow by 3.3% in 2026, which should support oil demand growth despite potential economic slowdowns [3][9] - The macroeconomic environment is expected to be supportive for commodities, although energy markets will face challenges from excess supply and geopolitical risks [11][12] Additional Important Insights 1. **Strategic Inventory Accumulation** - China's strategic accumulation of oil inventories is likely to continue, which has kept oil markets tight despite excess supply [28][30] - This accumulation reflects a long-term strategy to mitigate geopolitical risks [28] 2. **Impact of OPEC+** - OPEC+ is expected to manage oil price volatility actively, which may create both a ceiling and floor on crude prices [20] - The organization’s self-interest in maintaining price levels is crucial, especially given rising borrowing requirements [3] 3. **Market Dynamics** - The report highlights that while oil prices are under pressure from excess supply, geopolitical shocks can lead to significant price fluctuations [20] - The balance of supply and demand remains loose, suggesting a bearish outlook for oil prices in the near term [20] 4. **Refining Capacity and Market Conditions** - The refining sector is facing challenges due to geopolitical tensions and limited capacity growth, which could support higher margins [4][9] 5. **Long-term Projections** - The report indicates that while immediate conditions may be challenging, the long-term outlook for energy markets remains influenced by geopolitical developments and strategic stockpiling efforts [11][12] This summary encapsulates the key points discussed in the energy outlook conference call, providing insights into the expected trends and risks in the oil and gas markets for 2026.

Summary of Key Points from the Conference Call Industry Overview - **Global Macro Outlook**: The call discusses the macroeconomic outlook, focusing on US rates, international rates, commodities, currencies, and emerging markets [3][4][5][6]. US Rates - **Federal Reserve Policy**: The Fed is expected to skip the December meeting, with easing anticipated in January and April 2026. The funds rate target range is projected to be 3.25-3.5% by mid-2026 [3][10][15]. - **Yield Forecasts**: 2-year Treasury yields are expected to reach 3.60% in 1H26 and 3.85% by YE26. 10-year yields are projected to rise to 4.25% in 1H26 and 4.35% by YE26 [10][15]. - **Financing Gap**: A smaller financing gap is anticipated due to lower medium-term deficit projections, but a large gap is expected to emerge in FY26 [19][16]. International Rates - **Market Performance**: USD rates outperformed with a 1-2 basis point increase, while EUR rates sold off by 2-3 basis points. The UK saw a steeper 2s/30s curve [4][33]. - **UK Economic Data**: The UK labor market data was softer than expected, raising concerns about fiscal policy and potential tax changes [4][41]. Commodities - **Oil Market Outlook**: Global oil demand is projected to grow by 0.9 mbd in 2025 and 1.2 mbd in 2026, while supply is expected to outpace demand. Price forecasts are $58 for Brent and $54 for WTI in 2026 [85]. - **Natural Gas Prices**: US natural gas prices are forecasted to average $3.74/MMBtu in 2026, driven by production growth to meet LNG demand [88]. - **Base Metals**: A bullish outlook on copper is maintained, with prices expected to rise to $12,500/mt in 1H26 and average $12,075/mt for the full year 2026 [89]. Currencies - **EUR/USD Forecast**: A bullish view on EUR/USD is maintained, with a target of 1.22. However, gains may be moderate due to balanced risks on the US side [53][58]. - **Emerging Markets**: The outlook for emerging markets has improved, with a recommendation to stay overweight on EM FX and rates [6][10]. Additional Insights - **Foreign Demand for Treasuries**: Despite concerns about 'de-dollarization', foreign demand for US Treasuries has firmed in 2025, although private demand may decline due to higher yields [27][66]. - **Equity Market Trends**: US equity buying continues, with net equity purchases from foreign investors increasing [67][69]. This summary encapsulates the key points discussed in the conference call, providing insights into the macroeconomic landscape, commodity forecasts, and currency outlooks.

Commodity Outlook Summary Industry Overview - The report focuses on the commodities sector, highlighting trends and forecasts for various commodities including precious metals, industrial metals, energy, and agricultural products [1][2][3][10]. Key Themes and Forecasts 1. **Strong Performance Expected in 2026** - Commodities are projected to have another strong performance year, with the ICE MLCX TR index up 6% year-to-date, driven by gains in precious and industrial metals [1]. - Global GDP is forecasted to expand by 3.3% in 2026, with inflation expected to remain sticky at 2.9% [1][10]. 2. **Gold and Silver Outlook** - Gold prices could potentially reach $5,000/oz due to central bank and investor buying, supported by fiscal and monetary policy uncertainty [6][10]. - Silver demand may face headwinds from solar PV technology, but overall, both metals are expected to benefit from geopolitical risks and inflation expectations [2][10]. 3. **Industrial Metals Demand** - Industrial metals are expected to remain tight, with copper and aluminum likely to benefit from supply disruptions and stockpiling [2][10]. - The report anticipates a deficit in copper due to limited mine projects and outages at major mines [41]. 4. **Energy Sector Dynamics** - Oil prices are expected to average $60/bbl for Brent and $57/bbl for WTI in 2026, with a surplus in the oil market due to excess supply from OPEC+ [10]. - Geopolitical risks, particularly from Venezuela and the Russia-Ukraine conflict, could tighten the oil market despite the overall bearish outlook [2][10]. 5. **Agricultural Commodities** - A bearish outlook is maintained for wheat and soybean meal, while soybean oil is expected to see substantial upside due to strong demand [2][10]. - Agricultural commodities are influenced by robust supply growth and subdued demand, particularly in the context of ongoing geopolitical tensions [2][10]. Additional Insights - **Strategic Inventory Accumulation** - Strategic inventory accumulation, particularly by China, is expected to continue, supporting both energy and metals markets despite overall demand and balance conditions [52][53]. - The report notes that stockpiling has been influenced more by trade policy than geopolitical strategy in the metals sector [53]. - **Diversification and Inflation Hedging** - Commodities are increasingly viewed as essential for diversification and inflation hedging in investment portfolios, especially under current macroeconomic conditions [3][10]. - The report suggests that commodities could provide a unique hedge to traditional 60/40 portfolios amid rising inflation and geopolitical risks [3][10]. - **Market Risks and Opportunities** - Upside risks for commodities include potential geopolitical shocks and renewed demand from sectors like AI and defense spending, which could support industrial metals [41][10]. - Conversely, downside risks stem from excess supply in energy markets and potential economic slowdowns affecting demand [2][10]. Conclusion - The commodities sector is poised for a strong performance in 2026, driven by various macroeconomic factors, strategic inventory accumulation, and ongoing geopolitical uncertainties. Investors are encouraged to consider commodities for diversification and as a hedge against inflation.

Core Insights - The Indian economy grew at 8.2% in the second quarter of FY26, surpassing the RBI's projection of 6.8%, marking the fastest growth in six quarters [5][8] - Retail inflation dropped to 0.25% in October, the lowest since 2015, complicating the RBI's monetary policy decisions [5][8] - A poll of 20 economists showed 12 expect a 25 basis points rate cut to 5.25%, while 8 anticipate the rate will remain unchanged [8] Economic Growth - The nominal GDP growth for the second quarter was recorded at 8.7%, slightly down from 8.8% the previous year [5][8] - Economists are cautious about future growth, with expectations of a slowdown in the second half of FY26 [7][8] Inflation Forecast - The RBI has revised its full-year FY26 inflation estimate down to 2.6% from 4.2% in February, with forecasts of 4% in Q4 FY26 and 4.5% in Q1 FY27 [6][8] - Current estimates suggest inflation could undershoot the RBI's forecast by 50-60 basis points, potentially supporting a rate cut in December [7][8] Monetary Policy Outlook - The RBI has cut the policy rate by 100 basis points since February, maintaining a pause since August, while rates on outstanding loans have decreased by 54 basis points [8] - Economists express mixed views on the upcoming RBI rate decision, with some indicating a need for caution due to low nominal growth numbers [7][8]

Core Insights - Australian home prices increased by 1% in November, reaching a median value of A$888,941 ($581,990), with a year-to-date rise of 7.5% [2] - The growth in home prices was primarily driven by smaller state capitals, while Sydney and Melbourne experienced slower gains [2][4] - The Reserve Bank of Australia's interest rate cuts have been limited by rising inflation, affecting housing market sentiment [3][4] Price Trends - Home prices in Perth surged by 2.4% in November, and Adelaide saw a 1.9% increase, contrasting with Sydney's 0.5% and Melbourne's 0.3% growth [2] - The 1% rise in house prices marks the third consecutive month of strong gains, raising concerns about financial conditions and inflation [4] Market Sentiment - Expectations of no imminent interest rate cuts are undermining sentiment in Sydney and Melbourne, which are already expensive markets [1][4] - Auction clearance rates in Sydney and Melbourne remained in the lower 60-70% range, below the decade average [3] Regulatory Environment - The banking regulator plans to impose a cap on high debt-to-income home loans starting in February to mitigate housing risks [5] - Experts predict that housing gains may slow in 2026 due to poor affordability and a less favorable outlook for interest rates [5]

Economic Data and Fed Insights - The week begins with comprehensive manufacturing assessments through PMI and ISM data, which will provide insights into industrial sector health, new orders, employment trends, and pricing pressures [1][2] - Fed Chair Powell's evening speech on Monday is significant as it may be the last major communication before the December meeting, with market reactions expected based on his commentary regarding economic data and inflation [1][2] Cloud Software Earnings - Wednesday's earnings from Snowflake and Salesforce are critical for assessing cloud software valuations and enterprise technology spending trends, with Snowflake focusing on data analytics demand and Salesforce on CRM software demand [3] - Both companies face high expectations following strong performances in cloud infrastructure stocks, making their results and guidance important for validating current valuations [3] Cybersecurity and Semiconductor Demand - Earnings from CrowdStrike and Marvell on Tuesday will provide insights into cybersecurity spending and semiconductor demand, with CrowdStrike focusing on endpoint security and Marvell on data center networking chip demand [4] - Marvell's guidance on AI chip design and optical connectivity demand will be crucial for understanding the broader semiconductor ecosystem's participation in AI infrastructure [4] Services Sector and Employment Indicators - Wednesday's services sector assessment through Services PMI and ISM Non-Manufacturing PMI will provide insights into business activity in the largest sector of the economy, with a focus on inflation perspectives [5][6] - The convergence of services activity data and employment indicators will help assess economic momentum heading into year-end, influencing Fed policy decisions [6] Core PCE: Inflation Measure - Friday's Core PCE Price Index is the Fed's preferred inflation measure and will be analyzed for evidence of inflation returning to the 2% target, impacting December policy meeting expectations [7] - The report's timing close to the December meeting means significant deviations from expectations could trigger volatility in rate-sensitive sectors [7]

Core Insights - Inflation remains a significant threat to wealth accumulation for investors, compounded by stock market volatility and economic uncertainty [2][6] - To hedge against inflation, investors are encouraged to allocate a portion of their portfolio to tangible assets, commodities, and precious metals [2] - Bonds, particularly Treasury Inflation-Protected Securities (TIPS), are highlighted as important inflation-hedging vehicles [3][4] Group 1: Inflation and Investment Strategies - Despite improvements in inflation, it continues to pose risks to investors' purchasing power [2] - A diversified portfolio that includes real estate, commodities, and precious metals can serve as a hedge against inflation [2] - Exchange-traded funds (ETFs) provide an accessible way to invest in bonds, offering diversification and low fees [3] Group 2: TIPS and ETFs - TIPS adjust their principal value and interest payments in response to rising inflation, making them a reliable option for inflation protection [4] - The iShares TIPS Bond ETF (TIP) is a prominent fund with approximately $15 billion in assets and high liquidity, making it attractive for long-term holding [5] - A selection of ETFs, including TIP, DBC, and BIL, utilize strategies involving TIPS, commodities, or T-Bills to maintain pace with inflation and generate passive income [6]

Core Insights - The total student loan debt in the United States is approximately $1.8 trillion, which is a small fraction of the wealth held by the top 1% of Americans [1][4] - The wealth of the top 1% reached a record $52 trillion in Q2 2025, representing a $4 trillion increase from the previous year, sufficient to eliminate all student debt and still leave over $2 trillion [2] Economic Impact of Debt Cancellation - Immediate boost in consumer spending: Paying off student debt would provide borrowers with additional disposable income, potentially increasing GDP by 0.3% to 1% annually [6] - Reduction in wealth inequality: The top 1% might see a 3% to 4% decrease in their total wealth, while the bottom 90% would experience relief from debt but not significant wealth transfers [6] - Potential inflationary pressures: A sudden increase in spending power could lead to short-term inflation, particularly in housing and services, depending on the pace of debt cancellation [6] - Effects on credit markets: Banks and loan servicers would face a loss of future interest payments, which could tighten credit markets slightly [6]