US: Strong growth and accommodative monetary policy to supports equities – JP Morgan

FXStreet reports that economists at JP Morgan continue to expect yields will grind higher through the end of the year and strong economic growth accompanied by still relatively accommodative monetary policy will provide support to equity markets.

“The statement and committee projections reflect the FOMC view that fiscal support and continued vaccination efforts will provide a strong boost to growth and strengthen the recovery in the labor market, while potentially causing more persistently higher inflation than originally forecasted. The median dot plot now reflects two rate hikes sometime in 2023, up from no rate hikes just three months ago. While Chairman Powell suggested the median dot plot should not be viewed as a definitive path forward to short-term rates, it’s clear the committee has shifted to a more hawkish stance, reflecting its more optimistic outlook on the economy.”

“Interestingly, when asked about the timing of the reduction in asset purchases, Chairman Powell shied away from providing new details but did say the committee was discussing tapering. We continue to expect yields will grind higher through the end of the year and strong economic growth accompanied by still relatively accommodative monetary policy will provide support to equity markets.”