J.P. Morgan Flags Stagflation Risk Despite Steady Growth — SkimNews
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- James Sullivan, managing director and co-head of global fundamental research at J.P. Morgan, said oil staying above $100 a barrel over an extended period could mark the start of a stagflation period, even if economic growth doesn't slow significantly.
- Sullivan called the combination of reasonable economic growth and higher inflation the first stagflation conversation since the 1970s, speaking on CNBC's "Squawk Box Asia."
- Record AI industry issuance and governments running record-level deficits "will absolutely have an impact on pricing," Sullivan said, especially in an environment of weaker demand.
- Long-term investors are increasingly shifting from government debt to corporate debt due to a mismatch of supply and demand, according to Sullivan.
- El Niño and the Middle East conflict are weighing on the global economic outlook and contributing to rising food and energy prices.
- Central banks are executing one of the first coordinated tightening cycles in many years, triggered by rising food and energy prices alongside sticky core inflation that Sullivan said is unlikely to turn around in the short term.
Why it matters: J.P. Morgan's warning reframes the stagflation debate: investors shouldn't wait for a recession to brace for inflation-driven damage. With oil above $100, AI debt issuance flooding the corporate market, and sovereign deficits pulling capital away from Treasuries, the bond market's pricing dynamics are already shifting — and coordinated central bank tightening means rate relief is unlikely to arrive quickly.
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