📝 There Is Scope For An Outsized Reaction In A Hawkish Fed: J.P. Morgan

With markets pricing in 200bp in cumulative policy tightening at the next four FOMC meetings, breakevens biased tighter, and valuations looking somewhat cheap, we see more limited room for yields here and it would be tempting to turn long. However, we recognize that investors have used the backup in yields to reduce bearish exposure and there is scope for an outsized reaction should the Fed deliver a hawkish outcome at this week’s policy meeting.

- J.P. Morgan Fixed Income