According to a recent JPMorgan survey, the risk of stagflation in the U.S. over the next year is significantly higher than that of a recession. The most favored asset class for 2025 is cash. The majority of respondents believe that the trade war initiated by the Trump administration has had the most severe negative impact on the U.S. economy.
Sixty percent of those surveyed anticipate stagnation in U.S. economic growth with inflation rates remaining above the Federal Reserve's 2% target. Twenty percent expect inflation to exceed 3.5%. There is a consensus on the weakening of the U.S. dollar, with most predicting the euro (EUR) will reach or exceed $1.11 by year-end, and the dollar depreciating by at least 8% this year.
JPMorgan noted a difference in perception between U.S. and global investors regarding the consequences of a change in U.S. administration. The yield on the 10-year U.S. Treasury is expected to remain stable, with over half forecasting it to reach 4.25% or higher by the end of 2025.
Nearly half of the respondents expect Brent crude oil prices to stabilize around $66 per barrel, while 30% anticipate a drop to $60 or below. Thirteen percent believe emerging market equities will outperform other asset classes, whereas 9% favor developed market equities. Additionally, 57% foresee Wall Street stocks experiencing the most significant capital outflows this year.
