Markets 'Bit Jumpy' on Lack of Available Data, JPMorgan's Craig Says

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Watch Markets 'Bit Jumpy' on Lack of Available Data, JPMorgan's Craig Says - Bloomberg on Dailymotion

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00:00Well, it has been a very volatile week, Kerry.

00:03I'm wondering if you can offer any explanations for what the catalyst might have been there

00:07and what you see as being the catalyst going forward.

00:11Do you anticipate some more volatility over the coming weeks and months?

00:16Yeah, I think some of the catalyst was the fact there just wasn't a lot of data coming out.

00:20And so when that's the case, the markets tend to get a little bit jumpy around what is available.

00:26And I think the concerns around the Bank of Japan, maybe hiking rates,

00:30the impact that may have on liquidity or unwinding of leverage,

00:34obviously weighed on those asset classes that have seen a lot of movement

00:37or are very sensitive to liquidity, such as some of the cryptocurrencies

00:40and the sort of views that that cryptocurrencies now have about broader risk sentiment.

00:45So I think there was a case of not being much data available,

00:48and that's adding to some of the concerns.

00:50And then some of these shifting narratives we've seen around the direction of rate cuts

00:54from different central banks, again, playing into the market.

00:57I think once we start to get a full suite of economic data on the public side

01:01coming back out of the US, that will start to allay some of those concerns

01:05around the standing of the US economy and obviously the trajectory into next year.

01:09And similarly, when we hear from the central banks in December around their plans,

01:13I think you'll probably get a market that's again focused on a global

01:17and US economy that's continuing to expand and risk assets are likely to do well in that environment.

01:24In terms of rate cuts, particularly from the Fed heading into 2026,

01:29I mean, there's going to be a new chair, will be a Trump appointee,

01:32probably a very dovish chair as well.

01:35But do you anticipate there might be a bit of disagreement at the Fed board in 2026?

01:40We might see an interesting looking dot plot.

01:43And what might the market implications of that be?

01:45Yeah, I think absolutely.

01:48I think what we'll see, and even coming into the December meeting,

01:51we're now expecting a rate cut to be priced in December.

01:54The market is almost fully pricing in that rate cut.

01:56It will be about that dispersion in returns.

01:59Obviously, we know that there is quite a dovish member on the Fed at the moment

02:04that's been opting for sort of larger 50 basis point rate cuts.

02:07I think that'll still be there.

02:09And we may see some other committee members who are more on the side of being a little bit concerned

02:13why we haven't seen that inflation come through just yet,

02:16and that that may start to creep in next year in terms of companies being willing to pass on

02:20some of these higher prices as they see those tax rebates come into households

02:24and a bit more money in the pocket of consumers in the US.

02:27And so I think you'll see a lot more dispersion in that dot plot.

02:30And I think one of the wild cards actually coming into next year is the fact that we are thinking about

02:35who may be the new federal chair in terms of leading the organisation,

02:40but also the outcome from that Supreme Court looking at in terms of what the outcome may be for Lisa Cook

02:47and how that could change the composition of the Federal Reserve as well,

02:50as well as the broader members from the different state level reserves.

02:54So I think that would be the biggest upset to a lot of the outlooks at the moment

02:57in terms of if we get a much, much more dovish Fed being put in

03:01and the view that you get a lot more policy easing that could lead to a bit of a policy misstep next year.

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