JP MORGAN CHASE(US:JPM)2025-06-02 15:44Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the Global Macro Outlook, focusing on US Rates, International Rates, Commodities, Currencies, and Emerging Markets [3][4][5][6]. Core Insights and Arguments US Rates - Treasury Yield Forecast: The forecast for 10-year Treasury yields has been revised upward to 4.35% by year-end, from 4.00% previously. The 2-year Treasury yield is now expected to end the year at 3.50%, up from 3.10% [7][15]. - Impact of Fiscal Policy: The budget reconciliation bill could raise the primary deficit by $150 billion from FY25-26, which is 0.4% of GDP. This could be offset by an estimated $100 billion to $200 billion in tariff revenue [31][32]. International Rates - European Rates: The recommendation is to stay overweight (OW) on European rates despite ongoing challenges [45]. Commodities - Oil Demand: Global oil demand has softened, primarily due to a decline in US oil consumption. As of May 20, demand increased by 340,000 barrels per day (kbd) but remains nearly 300 kbd below projections [92]. - Price Forecasts: Price forecasts for natural gas in Northwest Europe have been lowered to 35 EUR/MWh for 2Q25 and 3Q25, down from 40/45 EUR/MWh [7][97]. Copper prices are expected to average $9,225/mt over 2H25, while aluminum prices are forecasted at $2,325/mt [100]. Currencies - Weaker Dollar Strategy: The strategic call remains for a weaker dollar following the US-China tariff de-escalation. The dollar's performance is expected to be influenced by data rather than policy [5][69][72]. - USD/CNY Forecast: The forecast for USD/CNY has been adjusted downward, with expectations of 7.20 in 2Q and 7.30 in 4Q [89]. Emerging Markets - Sovereign and Corporate Ratings: The recommendation is to stay underweight (UW) on EM sovereigns while moving EM corporates to market weight (MW) due to tariff reprieve [8][45]. Other Important Insights - Market Positioning: Investor positioning in the Treasury market is no longer as stretched to the long side, indicating that active investors have more scope to add duration [26]. - Foreign Holdings: Foreign investors own approximately 30% of the Treasury market, predominantly in short-dated securities [37][40]. - Moody's Downgrade Impact: Following Moody's downgrade of US debt, risks are skewed towards a bearish steepening in the near term, with expectations of higher interest expenses [32][36]. This summary encapsulates the key points discussed in the conference call, providing insights into the macroeconomic landscape, commodity forecasts, currency strategies, and emerging market dynamics.