Inflation, US election to drive markets in 2024 – JPMorgan Trader Survey
About 27% of traders see inflation as having the biggest impact, followed by 20% about the November election, according to a survey released Tuesday.
Bonds and stocks rallied late last year on expectations that slowing inflation would trigger large interest rate cuts by central banks this year. But those bets were scaled back after Friday’s explosive U.S. jobs data triggered the biggest sell-off in U.S. Treasuries since September.
Markets are bracing for additional volatility as the U.S. presidential election approaches, with former President Donald Trump winning the New Hampshire Republican primary, edging closer to a rematch with Democratic President Joe Biden. Eddie Wen, global head of digital markets at JPMorgan, said the greater focus on macro and risk developments this year could lead to near-term volatility, with particular focus on the release of monthly U.S. jobs and inflation figures.
Concerns about recession, which ranked first in last year’s survey, fell to third place at 18% as economic growth exceeded expectations, the survey said.
The war in Europe, where Russia’s invasion of Ukraine is entering its third year, and the war in the Middle East, where the Hamas-Israel conflict is showing signs of escalating, followed at 14%. Traders expected volatile markets to remain their top trading challenge, but the percentage of respondents who ranked them as number one ranked 28%, down 18 percentage points from last year. Liquidity availability is near the top of the list of trading problems at 24%, up from 22% last year, and access to liquidity remains the biggest market structure issue for traders.
Chi Nzelu, global head of macro e-Trading at JPMorgan, said consistent access to liquidity from a variety of providers is becoming more important for investors as electronic trading grows significantly.
“They want to know that they will continue to be trustworthy, even during traumatic times. This has been the case widely across many markets in recent years,” he said.
Credit markets and cash asset traders cited liquidity availability as their biggest challenge.
“The market structure within the credit market is becoming more complex,” Wen said.
“With the advent of portfolio trading, block trading, and block trading, there are more trading platforms supporting corporate bond trading, all of which are now becoming more electronic over time.”
That means choosing the best way to execute a deal becomes an important question for investors, he said.
(You can now subscribe to ETMarkets WhatsApp channel)
Download the Economic Times news app to get daily market updates and real-time business news.
Subscribe to The Economic Times Prime and read Economic Times ePaper Online and Sensex Today.
Top trending stocks: SBI stock price, Axis Bank stock price, HDFC Bank stock price, Infosys stock price, Wipro stock price, NTPC stock price.
