JPMorgan’s trading desk is bullish near term once again

JPMorgan’s trading desk turned “tactically bullish” after Treasury yields eased from last week’s highs, citing improving macro fundamentals, consumer strength, earnings expectations and supportive technicals. The 10-year yield topped 5.3%, its highest level since 2002, while the 30-year yield reached a 24-year high; lighter-than-expected U.S. inflation and employment data helped yields retreat. The desk favors technology as a core long and also likes banks, but says broader investor sentiment likely depends on yields holding steady or moving lower.

Analysis

The actionable variable is the source of any yield-curve steepening, not steepening alone. A bull steepener—front-end rates falling as inflation cools—would support duration-sensitive growth and improve risk appetite; a bear steepener driven by a higher term premium could pressure tech multiples and raise funding costs without delivering the same benefit to banks. That makes the desk’s simultaneous preference for tech and banks conditional rather than a clean broad-market signal. The bank call is also a trading-desk view, not JPMorgan corporate guidance or evidence of improved JPM earnings.

Near term, the services data can quickly challenge the stabilization narrative. Over 1–3 months, confirmation requires yields to hold below their recent highs and earnings expectations to remain resilient; otherwise recent gains may reflect positioning relief rather than a durable turn. Over 6–18 months, persistent high long rates would keep valuation pressure on long-duration equities and could expose weaker, deposit-sensitive lenders more than diversified large banks. The contrarian risk is that the market is treating a brief pullback in yields as a regime change: a renewed rise toward or above the reported 5.3% 10-year yield high would undermine the bullish setup.

Key Decisions for Investors

• Avoid treating JPMorgan’s desk call as a standalone signal to buy JPM shares. It is not company guidance; assess JPM separately against its own results and guidance.
• Consider a small, defined-risk long in QQQ only if the services release is not materially stronger than expected and Treasury yields remain below their recent highs. The thesis is a relief in discount-rate pressure plus continued earnings resilience; exit or reassess if the 10-year yield retests and sustains above 5.3%.
• Do not express the bank view through an undifferentiated regional-bank long solely on a steepening curve. First establish whether steepening is driven by falling short rates or rising long rates, and monitor deposit costs and credit quality; the latter steepener can be adverse for both funding and risk appetite.
• Treat a services surprise that pushes yields higher as a near-term catalyst to reduce the conditional tech exposure, not as an automatic short signal. Reassess if subsequent inflation and employment data continue to ease and yields stabilize.