JPMorgan Warns of Cautious Stance as Hawkish Warsh Speech Sends Rate Hike Odds Soaring

JPMorgan's trading desk has adopted a 'tactically cautious' approach to US stocks following Fed Chair Kevin Warsh's speech at the Jackson Hole Symposium.

Warsh emphasized that inflation has yet to show signs of easing, stating that the central bank still has work to do. This hawkish tone has led to an increase in rate hike expectations.

The odds of a 25-basis-point hike at the September 16 Federal Open Market Committee (FOMC) meeting have jumped to 65.9%, up from 57% on Friday and 41.4% a week ago, according to the CME FedWatch tool.

JPMorgan's Head of U.S. Market Intelligence, Andrew Tyler, warned that near-term variables are likely to cause markets to chop sideways, citing risk of higher rates, seasonality, and weakness in AI stocks as contributing factors.