Global Market Insights Strategy Team
Americas
Europe
Asia
Karen Ward
London
Dr. David Kelly, CFA
New York
2
GTM Europe
Tai Hui
Hong Kong
Chaoping Zhu,
CFA
Shanghai
David Lebovitz
New York
Gabriela Santos
New York
Michael Bell, CFA
London
Vincent Juvyns
Luxembourg
Marcella Chow
Hong Kong
Meera Pandit, CFA
New York
Jack Manley
New York
Hugh Gimber, CFA
London
Tilmann Galler, CFA
Frankfurt
Ian Hui
Hong Kong
Jordan Jackson
New York
Stephanie Aliaga
New York
Ambrose Crofton,
CFA
London
Maria Paola Toschi
Milan
Adrian Tong
Hong Kong
Shogo Maekawa
Tokyo
Olivia Schubert
New York
Nimish Vyas
New York
Max McKechnie
London
Elena Domecq
Madrid
Sahil Gauba
Mumbai
Agnes Lin
Taipei
Lucia Gutierrez Mellado
Madrid
Clara Cheong
Singapore
Kerry Craig, CFA
Melbourne
2
Page reference
Global economy
Equities
ESG
4.
5.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
78.
79.
80.
81.
82.
83.
84.
85.
86.
87.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
3
GTM Europe
Global growth
Global Purchasing Managers’ Index (PMI) for
manufacturing
Global inflation
Inflation expectations
Global inflation forecasts and job vacancies
Global government debt
Global monetary policy
Global currencies
Global supply chains
US GDP
US Economic Monitor
US business surveys
US Conference Board indicators
US business and residential investment
US consumer
US labour market
US debt
US inflation
US Federal Reserve policy
US focus: Housing market
Eurozone GDP
Eurozone Economic Monitor
Eurozone business investment
Eurozone consumer
Eurozone labour market
Eurozone unemployment
Eurozone inflation
European Central Bank policy
Eurozone debt
European natural gas supply
Eurozone focus: Fiscal support and gas prices
UK GDP
UK consumer and labour market
UK inflation
UK focus: Fiscal stimulus
Japan GDP
China GDP and business surveys
China debt and credit dynamics
China inflation and policy rates
Emerging market structural dynamics
Emerging market growth
Emerging market focus: Food prices and global trade
Global earnings expectations and equity valuations
Global equity market correlations with Treasury yields
Global equity sector weights
Global equity income
Profit margins
Equity market factors
US earnings
US equity valuations and performance
US valuations and subsequent returns
US bull and bear markets
Europe earnings
Europe equity valuations and performance
Europe large, mid and small capitalisation equities
UK earnings
Japan equity market and currency
Emerging market equity drivers
Emerging market equity valuations and subsequent
returns
63. Equity focus: Earnings and stock price declines in
recessions
64. World stock market returns
Fixed income
65.
66.
67.
68.
69.
70.
71.
Fixed income yields
Global government bond yields
US yield curve
Investment-grade bonds
High yield bonds
Emerging market bonds
Fixed income focus: US government bond risk and
reward
72. Global fixed income spreads and returns
Other assets
73.
74.
75.
76.
77.
Oil
Commodities
Alternative sources of diversification
Alternative investments: Real assets
Asset return expectations
Impact of climate concerns on consumer choices
Emissions targets and labour share of income
Carbon pricing
Global CO2 emissions by country
Global greenhouse gas emissions and energy costs
Global energy mix and energy transition investment
Global energy consumption
Importance of governance and social issues
ESG and capital markets
Sustainable investment flows and assets under
management
Investing principles
88.
89.
90.
91.
92.
93.
94.
95.
96.
3
Life expectancy
The effect of compounding
Cash investments
Long-term asset returns
Annual returns and intra-year declines
Asset class risk-return trade-off
S&P 500 and fund flows
US asset returns by holding period
Asset class returns (EUR)
Global economy
Global growth
GTM Europe
Real GDP growth
4
Consensus forecasts for 2022 real GDP growth
Index level, rebased to 100 at 1Q 2006
% change year on year
150
400
10
Forecast
9
140
340
8
7
130
280
6
120
220
5
4
110
160
3
2
100
100
1
90
40
'06
4
'08
US
'10
UK
'12
'14
Eurozone
'16
'18
'20
'22
China
0
US
Eurozone
UK
Start of 2022
Latest
Japan
Source: (Left) BEA, Bloomberg, Eurostat, National Bureau of Statistics of China, ONS, J.P. Morgan Asset Management. (Right) Bloomberg, J.P. Morgan Asset
Management. Forecasts are from Bloomberg contributor composite. Forecast for India is for fiscal year 2022. Past performance is not a reliable indicator of current
and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
China
India
Index level
2008
5
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
'22
'22
May Jun
Developed
Emerging
5
GTM Europe
Global manufacturing PMI
Eurozone
Global economy
Global Purchasing Managers’ Index (PMI) for manufacturing
Global
52,3
52,2
Developed
55,0
52,5
Emerging
49,5
51,7
Eurozone
54,6
52,1
France
Germany
Italy
Spain
54,6
51,4
54,8
52,0
51,9
50,9
53,8
52,6
Greece
Ireland
Sweden
53,8
51,1
56,4
53,1
54,9
53,7
Switzerland
UK
US
Japan
60,0
59,1
54,6
52,8
57,0
52,7
53,3
52,7
China
48,1
51,7
Indonesia
Korea
Taiwan
India
50,8
50,2
51,8
51,3
50,0
49,8
54,6
53,9
Brazil
Mexico
Russia
54,2
54,1
50,6
52,2
50,8
50,9
Source: S&P Global, J.P. Morgan Asset Management. The Global Purchasing Managers’ Index (PMI) for manufacturing assesses the economic health of the
sector by surveying manufacturing businesses regarding output, new orders, stocks of purchases, supplier delivery times and employment. A score of 50 indicates
that economic activity is neither expanding nor contracting, above 50 indicates expansion. The colours range from red to yellow to green, where red is below 50,
yellow is at 50 and green is above 50. Quarterly averages are shown, except the two most recent monthly data points. Past performance is not a reliable indicator
of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
6
% change year on year
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
2022
Jul
Developed
2021
Jun
2020
Emerging
6
GTM Europe
Headline inflation
Eurozone
Global economy
Global inflation
Global
1,3
1,5
1,5
1,4
1,1
0,9
1,0
1,2
1,4
2,0
2,6
3,2
3,2
3,3
3,4
3,6
4,2
4,9
4,8
4,9
5,4
6,4
6,8
7,0
Developed
0,5
0,7
0,6
0,6
0,5
0,4
0,5
0,9
1,1
1,7
2,5
3,1
3,3
3,4
3,6
3,9
4,6
5,2
5,4
5,6
6,1
7,1
7,2
7,6
Emerging
2,7
2,8
2,8
2,5
2,0
1,5
1,7
1,7
1,8
2,3
2,7
3,2
3,1
3,1
3,0
3,1
3,7
4,3
4,0
3,9
4,2
5,3
6,1
6,2
Eurozone
France
Germany
0,3
0,4
-0,2
-0,3
-0,3
-0,3
-0,3
0,9
0,9
1,3
1,6
2,0
1,9
2,2
3,0
3,4
4,1
4,9
5,0
5,1
5,9
7,4
7,4
8,1
0,2
0,9
0,2
0,0
0,1
0,2
0,0
0,8
0,8
1,4
1,6
1,8
1,9
1,5
2,4
2,7
3,2
3,4
3,4
3,3
4,2
5,1
5,4
5,8
0,9
-0,1
0,0
-0,2
-0,2
-0,3
-0,3
1,0
1,3
1,7
2,0
2,5
2,3
3,8
3,9
4,1
4,5
5,2
5,3
4,9
5,1
7,3
7,4
7,9
Italy
Spain
Greece
Ireland
Sweden
Switzerland
UK
US
Japan
China
Indonesia
Korea
Taiwan
India
Brazil
Mexico
Russia
-0,4
0,8
-0,5
-1,0
-0,6
-0,3
-0,3
0,7
1,0
0,6
1,0
1,2
1,3
1,0
2,5
2,9
3,2
3,9
4,2
5,1
6,2
6,8
6,3
7,3
-0,3
-0,7
-0,6
-0,6
-0,9
-0,8
-0,6
0,4
-0,1
1,2
2,0
2,4
2,5
2,9
3,3
4,0
5,4
5,5
6,6
6,2
7,6
9,8
8,3
8,5
-1,9
-2,1
-2,3
-2,3
-2,0
-2,1
-2,4
-2,4
-1,9
-2,0
-1,1
-1,2
0,6
0,7
1,2
1,9
2,8
4,0
4,4
5,5
6,3
8,0
9,1
10,5
-0,6
-0,6
-1,1
-1,2
-1,5
-1,0
-1,0
-0,1
-0,4
0,1
1,1
1,9
1,6
2,2
3,0
3,8
5,1
5,4
5,7
5,0
5,7
6,9
7,3
8,3
0,9
0,7
1,0
0,6
0,4
0,2
0,6
1,9
1,8
2,1
2,8
2,4
1,8
1,8
2,5
3,0
3,3
3,9
4,5
3,9
4,4
6,3
6,6
7,5
-1,3
-1,2
-1,4
-1,1
-0,9
-0,8
-1,0
-0,6
-0,4
-0,2
-0,1
0,3
0,5
0,5
0,8
0,8
1,3
1,5
1,3
1,4
1,9
2,2
2,3
2,7
0,6
1,0
0,2
0,5
0,7
0,3
0,6
0,7
0,4
0,7
1,5
2,1
2,5
2,0
3,2
3,1
4,2
5,1
5,4
5,5
6,2
7,0
9,0
9,1
0,6
1,0
1,3
1,4
1,2
1,2
1,4
1,4
1,7
2,6
4,2
5,0
5,4
5,4
5,3
5,4
6,2
6,8
7,0
7,5
7,9
8,5
8,3
8,6
0,1
0,3
0,2
0,0
-0,4
-0,9
-1,2
-0,7
-0,5
-0,4
-1,1
-0,8
-0,5
-0,3
-0,4
0,2
0,1
0,6
0,8
0,5
0,9
1,2
2,5
2,5
2,5
2,7
2,4
1,7
0,5
-0,5
0,2
-0,3
-0,2
0,4
0,9
1,3
1,1
1,0
0,8
0,7
1,5
2,3
1,5
0,9
0,9
1,5
2,1
2,1
2,0
1,5
1,3
1,4
1,4
1,6
1,7
1,6
1,4
1,4
1,4
1,7
1,3
1,5
1,6
1,6
1,7
1,7
1,9
2,2
2,1
2,6
3,5
3,6
0,2
0,4
0,8
0,9
0,1
0,6
0,6
0,9
1,4
1,9
2,5
2,6
2,3
2,6
2,6
2,4
3,2
3,8
3,7
3,6
3,7
4,1
4,8
5,4
-0,7
-0,5
-0,3
-0,6
-0,3
0,1
0,0
-0,2
1,4
1,2
2,1
2,4
1,8
1,9
2,3
2,6
2,5
2,9
2,6
2,8
2,3
3,3
3,4
3,4
6,2
6,7
6,7
7,3
7,6
6,9
4,6
4,1
5,0
5,5
4,2
6,3
6,3
5,6
5,3
4,3
4,5
4,9
5,7
6,0
6,1
7,0
7,8
7,0
2,1
2,3
2,4
3,1
3,9
4,3
4,5
4,6
5,2
6,1
6,8
8,1
8,3
9,0
9,7
10,2
10,7
10,7
10,1
10,4
10,5
11,3
12,1
11,7
3,3
3,6
4,1
4,0
4,1
3,3
3,2
3,5
3,8
4,7
6,1
5,9
5,9
5,8
5,6
6,0
6,2
7,4
7,4
7,1
7,3
7,5
7,7
7,7
3,2
3,4
3,6
3,7
4,0
4,5
4,9
5,2
5,7
5,8
5,5
6,0
6,5
6,5
6,7
7,4
8,1
8,4
8,4
8,7
9,2
16,7
17,9
17,1
Source: Bank of Mexico, DGBAS, ECB, Goskomstat of Russia, IBGE, India Ministry of Statistics & Programme Implementation, Japan Ministry of Internal Affairs &
Communication, Korean National Statistical Office, National Bureau of Statistics China, ONS, Refinitiv Datastream, Riksbank, Statistics Indonesia, Swiss National
Bank, US Federal Reserve, J.P. Morgan Asset Management. Heatmap colours are based on the respective central bank target inflation rates. Blue is below target,
white is at target and red is above target. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
Global economy
Inflation expectations
GTM Europe
US inflation expectations
Eurozone inflation expectations
%, USD inflation swap rates
%, EUR inflation swap rates
4
4
3
3
2
2
1
1
0
0
'06
7
7
'08
1y1y
'10
5y5y
'12
'14
'16
'18
'20
'22
'06
'08
1y1y
'10
5y5y
'12
'14
'16
Source: (All charts) Bloomberg, J.P. Morgan Asset Management. The 1y1y inflation swap rate is a measure of average inflation expectations for one year, starting
in one year’s time. The 5y5y inflation swap rate is a measure of average inflation expectations for five years, starting in five years’ time. Data shown are four-week
rolling averages. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'18
'20
'22
Global economy
Global inflation forecasts and job vacancies
GTM Europe
Median of economists’ forecasts for headline CPI
Job vacancies
% change year on year, quarterly average
10
Forecast
Indexed to 100 at pre-pandemic peak
8
180
9
160
8
140
7
120
6
5
100
4
80
3
60
2
40
1
20
0
1Q
2Q
3Q
4Q
1Q
2021
US
8
Eurozone
2Q
3Q
2022
UK
4Q
1Q
2Q
3Q
2023
4Q
0
'02
'04
US
'06
'08
Germany
'10
UK
'12
'14
Source: (Left) Bloomberg, BLS, Eurostat, ONS, J.P. Morgan Asset Management. CPI is consumer price index. (Right) BLS, Deutsche Bundesbank, ONS, Refinitiv
Datastream, J.P. Morgan Asset Management. UK vacancy data is a three-month average as published. Past performance is not a reliable indicator of current and
future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'16
'18
'20
'22
Global economy
Global government debt
GTM Europe
Government gross debt to GDP ratios by country
Government debt to GDP ratios
% of nominal GDP
% of nominal GDP
9
140
Russia
Indonesia
120
Mexico
S. Africa
China
100
India
Brazil
80
Switzerland
Germany
60
UK
Eurozone
40
France
Spain
US
20
Italy
Japan
0
0
50
100
150
200
Developed market historical range*
250
300
'01
'03
US
'05
UK
'07
'09
Eurozone
'11
'13
Emerging market historical range*
2022 IMF forecast
9
Source: (Left) IMF, Refinitiv Datastream, J.P. Morgan Asset Management. *Historical ranges are since 1990 or more recent, depending on data availability up until
the end of 2021. (Right) BIS, Refinitiv Datastream, J.P. Morgan Asset Management. Debt is gross debt to GDP. Past performance is not a reliable indicator of
current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'15
'17
'19
'21
Global economy
Global monetary policy
GTM Europe
Market expectations for central bank policy rates
Central bank balance sheets
%
USD trillions
3,5
10
Forecast
10
30
8
25
6
20
4
15
2
10
0
5
3,0
2,5
2,0
1,5
1,0
0,5
0,0
-0,5
-2
-1,0
+0
+1
US
10
+2
+3
Eurozone
+4
UK
+5
Years
+6
Japan
+7
+8
Switzerland
+9
+10
0
'07
'09
'11
'13
12-month change
in balance sheet
'15
'17
'19
'21
Global central bank
balance sheet
Source: (Left) Bloomberg, J.P. Morgan Asset Management. Expectations are calculated using OIS forwards. (Right) BoE, BoJ, ECB, Fed, Refinitiv Datastream,
Swiss National Bank (SNB), J.P. Morgan Asset Management. Global central bank balance sheet is the sum of the balance sheets of the BoE, BoJ, ECB and Fed.
Forecast from J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
Global economy
Global currencies
GTM Europe
USD real effective exchange rate and interest rate differential
Global current account balances
Index level (LHS); % point (RHS)
% of nominal GDP
130
11
3,0
US
125
2,5
UK
Brazil
120
2,0
115
1,5
Turkey
India
Mexico
110
1,0
Indonesia
China
105
0,5
100
0,0
Eurozone
Japan
South Africa
95
-0,5
90
-1,0
South Korea
Russia
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
USD broad real
US minus DM 10-year
effective exchange rate
government bond yield
11
-6
-4
-2
Developed markets
0
2
4
Emerging markets
Source: (Left) J.P. Morgan Securities Research, Refinitiv Datastream, J.P. Morgan Asset Management. DM is developed markets and the yield is calculated as a
GDP-weighted average of the 10-year government bond yields of Australia, Canada, France, Germany, Italy, Japan, Switzerland and the UK. (Right) Bloomberg,
J.P. Morgan Asset Management. Current account data is for 4Q 2021. Past performance is not a reliable indicator of current and future results. Guide to the
Markets - Europe. Data as of 30 June 2022.
6
8
Global economy
Global supply chains
GTM Europe
Manufacturing PMI: Supplier delivery times
World Container Index
Index level
USD per 40ft container
12.000
65
12
60
10.000
55
50
8.000
45
6.000
40
35
4.000
30
25
Supplier delivery
times increasing
2.000
20
0
15
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
US
Eurozone
UK
12
'12
'13
'14
'15
'16
'17
'18
Source: (Left) S&P Global, J.P. Morgan Asset Management. (Right) Bloomberg, Drewry, J.P. Morgan Asset Management. The World Container Index assessed by
Drewry reports actual spot container freight rates for eight major East-West trade routes as a weighted average by volume. Past performance is not a reliable
indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'19
'20
'21
'22
Global economy
US GDP
GTM Europe
Contribution to US real GDP growth
US real GDP growth and ISM composite
% change year on year
15
% change year on year (LHS); index level (RHS)
15
80
10
10
70
5
5
60
0
0
50
-5
-5
40
-10
-10
30
-15
-15
'12
'13
'14
Real GDP
Net exports
13
13
'15
'16
'17
'18
'19
Consumption
Government
'20
'21
'22
Investment
20
'00
'02 '04 '06
Real GDP
'08
'10
'12
'14
Change in inventories
Source: (All charts) BEA, Bloomberg, ISM, Refinitiv Datastream, J.P. Morgan Asset Management. The Institute for Supply Management (ISM) composite is an
economy-weighted average of the manufacturing and non-manufacturing surveys. A score of 50 indicates that economic activity is neither expanding nor
contracting, above 50 indicates expansion. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
'16 '18 '20 '22
ISM composite
Global economy
US Economic Monitor
GTM Europe
US economic indicators
Percentile rank relative to historic data since 1990
Broad indicators
Consumer and services
Manufacturing
Labour market
14
Key:
Elevated
recession risk
100
Lower
recession risk
90
80
70
60
6 months
prior
50
Latest
40
30
20
10
Higher
recession risk
0
Conference
Conference
Board Leading Board Leading
Economic
Credit Index
Index
14
Consumer
confidence:
Present
situation
ISM nonmanufacturing
ISM
manufacturing:
New orders
Non-farm
payrolls
Source: BLS, Conference Board, ISM, Refinitiv Datastream, J.P. Morgan Asset Management. Elevated recession risk flags are shown when the underlying
indicator is at a level consistent with the onset of any of the three recessions prior to the Covid-19 recession. Past performance is not a reliable indicator of current
and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Global economy
US business surveys
GTM Europe
15
US ISM manufacturing: New orders
Index level
75
Recession
65
55
Elevated recession risk
45
35
25
'98
'00
'02
'04
'06
'08
'10
'12
'14
'16
'18
'20
'22
'20
'22
US ISM non-manufacturing
Index level
70
65
60
55
50
Elevated recession risk
45
40
35
'98
15
'00
'02
'04
'06
'08
'10
'12
'14
'16
'18
Source: (All charts) ISM, Refinitiv Datastream, J.P. Morgan Asset Management. Periods of “recession” are defined using US National Bureau of Economic
Research (NBER) business cycle dates. Elevated recession risk line is shown as the highest value of the underlying indicator observed at the start of the three
recessions prior to the Covid-19 recession. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
Global economy
US Conference Board indicators
GTM Europe
16
US Leading Economic Index
% change year on year
20
15
10
5
0
-5
-10
-15
-20
-25
Recession
Elevated recession risk
'90
'92
'94
'96
'98
'00
'02
'04
'06
'08
'10
'12
'14
'16
'18
'20
'22
'20
'22
US Leading Credit Index
Index level
10
8
Lending conditions tightening
6
4
Elevated recession risk
2
0
-2
-4
'90
16
'92
'94
'96
'98
'00
'02
'04
'06
'08
'10
'12
'14
'16
Source: (All charts) Conference Board, Refinitiv Datastream, J.P. Morgan Asset Management. Periods of “recession” are defined using US National Bureau of
Economic Research (NBER) business cycle dates. Elevated recession risk line is shown as the highest value for the Leading Economic Index and lowest for the
Leading Credit Index at the start of the three recessions prior to the Covid-19 recession. Past performance is not a reliable indicator of current and future results.
Guide to the Markets - Europe. Data as of 30 June 2022.
'18
Global economy
US business and residential investment
US real business investment and future capex intentions
US residential and business investment
% change year on year (LHS); index level (RHS)
% of nominal GDP
15
40
17
16
8
Recession
10
30
5
20
0
15
7
14
6
13
5
12
4
11
3
10
-5
0
-10
-10
-15
-20
-20
-30
'00
17
GTM Europe
'02 '04 '06 '08
Business investment
'10
'12
'14 '16 '18 '20 '22
Future capex intentions
10
2
'65 '69 '73 '77 '81 '85 '89 '93 '97 '01 '05 '09 '13 '17 '21
Business investment
Residential investment
Source: (Left) BEA, Dallas Fed, Kansas City Fed, New York Fed, Philadelphia Fed, Refinitiv Datastream, Richmond Fed, J.P. Morgan Asset Management. Future
capex intentions is an average index level of the five aforementioned Fed districts equally weighted, displayed using a three-month moving average. (Right) BEA,
Refinitiv Datastream, J.P. Morgan Asset Management. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business
cycle dates. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Global economy
US consumer
GTM Europe
US median consumer deposits by income group
US consumer confidence
Index level
160
18
4-week moving average, rebased to 100 in Feb 2020
120
Recession
140
350
110
300
120
100
100
90
80
80
60
70
250
200
150
40
60
20
50
100
0
40
'88
18
'91 '94 '97 '00
Conference Board
consumer confidence
'03
'06
'09 '12 '15 '18 '21
University of Michigan
consumer sentiment
50
Feb ’20 Jun ’20 Oct ’20 Feb ’21 Jun ’21 Oct ’21 Feb ’22 Jun ’22
$20k - $35k
Total population
$125k +
Source: (Left) Conference Board, Refinitiv Datastream, University of Michigan, J.P. Morgan Asset Management. The consumer confidence indices can diverge
due to different emphasis in the surveys. The University of Michigan survey places a stronger weight on personal finances and buying conditions while the
Conference Board index emphasises employment. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle
dates. (Right) J.P. Morgan Asset Management. Based on select internal Chase data. Past performance is not a reliable indicator of current and future results.
Guide to the Markets - Europe. Data as of 30 June 2022.
Global economy
US labour market
GTM Europe
US unemployment, wage growth and interest rates
%, wage growth is % change year on year
20
Recession
18
16
14
12
10
8
6
4
2
0
'65
19
'70
Unemployment
'75
'80
'85
Wage growth
Federal funds rate
'90
'95
'00
'05
'10
Source: BLS, Federal Reserve Bank of Atlanta, Refinitiv Datastream, US Federal Reserve, J.P. Morgan Asset Management. Wage growth is average hourly
earnings until 2007 and thereafter it is the Atlanta Fed wage tracker. Periods of “recession” are defined using US National Bureau of Economic Research (NBER)
business cycle dates. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'15
'20
19
Global economy
US debt
GTM Europe
US debt to GDP ratios
US debt service ratios
% of nominal GDP
% of disposable income
110
20
14
48
13
46
12
44
11
42
10
40
9
38
100
90
80
70
60
50
40
30
8
20
'40
20
'50
'60
'70
'80
'90
Government
Non-financial corporates
'00
'10
Households
'20
36
'80
'85
'90
Households
'95
'00
'05
'10
'15
'20
Non-financial corporates
Source: (All charts) Bank for International Settlements, BEA, Congressional Budget Office (CBO), Refinitiv Datastream, US Federal Reserve, J.P. Morgan Asset
Management. For the household sector, gross disposable income is the amount of money that all of the individuals in the household sector have available for
spending or saving after income distribution measures (for example, taxes, social contributions and benefits) have taken effect. For the non-financial corporate
sector gross disposable income is essentially akin to gross operating surplus before dividends or interest is paid. Past performance is not a reliable indicator of
current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Global economy
US inflation
GTM Europe
US headline and core inflation
US headline inflation breakdown
% change year on year
% change year on year
9
9
8
8
7
21
7
6
6
5
5
Headline inflation
target
4
4
3
3
2
2
1
0
1
-1
0
-2
-1
'07
'09
'11
'13
'15
Core inflation
Headline inflation
'17
'19
'21
Apr ’21
Apr ’22
Oct ’21
Jan ’21
Jul ’21
Jan ’22
Shelter
Core services ex-shelter
Core goods ex-autos
Autos
21
Food
Energy
Source: (All charts) BLS, Refinitiv Datastream, J.P. Morgan Asset Management. CPI is the Consumer Price Index. Core is defined as excluding food and energy.
Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Global economy
US Federal Reserve policy
GTM Europe
22
US Federal Reserve policy rate and headline inflation
% Fed funds rate and market expectations, headline inflation is % change year on year
20
16
Recession
12
8
4
Longer-run
0
-4
'71
'74
'77
Federal funds rate
22
'80
'83
'86
Headline inflation
'89
'92
'95
'98
'01
'04
Federal Reserve median expectations
'07
'10
'13
'16
'19
'22
'25
Market expectations on 30 June 2022 (mean)
Source: Bloomberg, BLS, US Federal Reserve, J.P. Morgan Asset Management. Market expectations are calculated using OIS forwards. The longer-run
projection represents the committee’s median assessment of where the Fed funds rate would be expected to converge to under the appropriate monetary policy
and in the absence of further shocks to the economy. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle
dates. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'28
'31
Global economy
US focus: Housing market
GTM Europe
US 30-year mortgage rates
Single-family home sales and housing starts
%
12
Millions, seasonally adjusted annualised rate
10
23
9
2,00
8
1,75
7
1,50
6
1,25
5
1,00
4
0,75
3
0,50
8
6
4
2
2
0
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
23
0,25
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
Home sales
Housing starts
Source (Left) Mortgage Bankers Association of America, Refinitiv Datastream, J.P. Morgan Asset Management. (Right) Census Bureau, National Association of
Realtors, Refinitiv Datastream, J.P. Morgan Asset Management. Home sales show both new and existing homes. Past performance is not a reliable indicator of
current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Global economy
Eurozone GDP
GTM Europe
Contribution to eurozone real GDP growth
Eurozone real GDP and composite PMI
% change year on year
% change year on year (LHS); index level (RHS)
16
16
90
12
12
80
8
8
70
4
4
60
0
0
50
-4
-4
40
-8
-8
30
-12
-12
20
-16
-16
'12
'13
'14
'15
'16
'17
'18
'19
Real GDP
Consumption
Government
Net exports
24
24
'20
'21
'22
Investment
10
'00
'02 '04
Real GDP
'06
'08
'10
'12
'14
Change in inventories
Source: (All charts) Eurostat, Refinitiv Datastream, S&P Global, J.P. Morgan Asset Management. PMI is Purchasing Managers’ Index where a score of 50
indicates that economic activity is neither expanding nor contracting, above 50 indicates expansion. PMI data is shown with quarterly frequency. Past performance
is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'16 '18 '20 '22
Composite PMI
Global economy
Eurozone Economic Monitor
GTM Europe
Eurozone economic indicators
Percentile rank relative to historic data since 1999
Financial conditions
Consumer and services
Manufacturing
Labour market
100
25
Key:
Elevated
recession risk
Lower
recession risk
90
80
70
60
6 months
prior
50
Latest
40
30
20
10
Higher
recession risk
0
Bloomberg
financial
conditions
25
Consumer
confidence
Services PMI:
Business
expectations
Manufacturing
PMI: New
orders
Unemployment
Source: Bloomberg, European Commission, Eurostat, Refinitiv Datastream, S&P Global, J.P. Morgan Asset Management. Elevated recession risk flags are shown
when the underlying indicator is at a level consistent with eurozone recessions prior to the Covid-19 recession. Past performance is not a reliable indicator of
current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Global economy
Eurozone business investment
GTM Europe
26
Eurozone real non-residential investment
Eurozone real investment and investment confidence
% change year on year (LHS); index level (RHS)
Index level, rebased to 100 at start of eurozone recession
25
40
20
30
110
105
15
20
10
10
5
0
0
-10
-5
-20
-10
-30
-15
-40
100
95
90
85
80
-20
-50
'00
26
'02 '04 '06 '08
Non-residential
investment
'10
'12
'14
'16 '18 '20 '22
Investment goods
industry confidence
-8
-4
GFC
0
4
8
12 16 20 24 28 32
Quarters before/after start of recession
Current cycle
Source: (All charts) Eurostat, Refinitiv Datastream, J.P. Morgan Asset Management. Dotted line represents forecasts from Bloomberg contributor composite. Both
non-residential measures shown are in real terms and include both public and private investment. GFC is Global Financial Crisis. Past performance is not a
reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
36
40
Global economy
Eurozone consumer
GTM Europe
Eurozone cumulative excess* savings
Eurozone consumer confidence and services sector
Index level
EUR billions
65
0
1.000
Recession
900
60
-5
800
700
55
-10
600
50
-15
500
400
45
-20
300
40
-25
200
100
35
-30
'00
27
'02 '04 '06
Services PMI
'08
'10
'12
0
'14 '16 '18 '20 '22
Consumer confidence
Source: (Left) Bloomberg, European Commission, Refinitiv Datastream, S&P Global, J.P. Morgan Asset Management. (Right) European Central Bank, Haver,
J.P. Morgan Asset Management. *Excess household savings are defined as the aggregate amount that the consumer saved, in excess of typical savings during
2018 and 2019. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
27
Global economy
Eurozone labour market
GTM Europe
Eurozone unemployment rate and wage growth
28
Eurozone business surveys: Labour limiting production
%, wage growth is year on year
13
4,0
12
3,5
11
3,0
10
2,5
% of respondents
32
28
24
20
16
9
2,0
12
8
1,5
8
7
1,0
6
0,5
'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
Unemployment
Wage growth
28
4
0
'85
'88 '91 '94
Manufacturing
'97 '00
Services
'03
'06
Source: (Left) ECB, Eurostat, Refinitiv Datastream, J.P. Morgan Asset Management. Wage growth is based on negotiated wages. (Right) European Commission,
Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
'09
'12
'15
'18
'21
Global economy
Eurozone unemployment
GTM Europe
29
Germany, France, Italy and Spain unemployment rates
%
30
25
20
15
10
5
0
'00
'01
Spain
29
'02
Italy
'03
'04
France
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
Germany
Source: Eurostat, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results.
Guide to the Markets - Europe. Data as of 30 June 2022.
'17
'18
'19
'20
'21
'22
Global economy
Eurozone inflation
GTM Europe
Eurozone headline and core inflation
Eurozone headline inflation breakdown
% change year on year
% change year on year
10
10
9
9
8
8
7
7
6
6
5
5
Headline inflation
target
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
'07
'09
'11
'13
'15
Core inflation
Headline inflation
'17
'19
'21
Jan ’21
May ’21
Core services
Electricity & gas
30
30
Sep ’21
Core goods
Jan ’22
May ’22
Food, alcohol, tobacco
Liquid fuels
Source: (All charts) Eurostat, Refinitiv Datastream, J.P. Morgan Asset Management. Core inflation is defined as headline inflation less energy, food, alcohol and
tobacco. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Global economy
European Central Bank policy
GTM Europe
31
European Central Bank policy rate expectations
European 10-year government bond spreads over Germany
% deposit rate and market expectations
% point spread
7
4,0
3,5
6
3,0
5
2,5
2,0
4
1,5
3
1,0
0,5
2
0,0
1
-0,5
0
-1,0
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24 '26 '28 '30
ECB deposit rate
Market expectations on 30 June 2022 (mean)
31
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
Italy
Spain
France
Source: (Left) Bloomberg, European Central Bank, J.P. Morgan Asset Management. Market expectations are calculated using OIS forwards. (Right) Refinitiv
Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
Global economy
Eurozone debt
GTM Europe
32
Eurozone debt to GDP ratios
France, Germany, Italy and Spain government debt to GDP
% of nominal GDP
% of nominal GDP
180
120
Forecast
160
110
140
100
120
90
100
80
80
70
60
60
40
50
20
0
40
'00
32
'02 '04 '06 '08
Non-financial corporates
'10 '12 '14
Government
'16 '18 '20
Households
'22
'07
'09
Italy
'11
Spain
'13
France
'15
'17
Germany
Source: (Left) Bank for International Settlements, Refinitiv Datastream, J.P. Morgan Asset Management. Debt refers to gross debt. (Right) Bank for International
Settlements, IMF, Refinitiv Datastream, J.P. Morgan Asset Management. Debt refers to gross debt. Italy and France data are four-quarter moving averages.
Dotted lines represent the IMF forecasts for government debt to GDP in 2021 and 2022. Past performance is not a reliable indicator of current and future results.
Guide to the Markets - Europe. Data as of 30 June 2022.
'19
'21
'23
Global economy
European natural gas supply
GTM Europe
EU natural gas imports from Russia
EU natural gas inventories
Million cubic metres
% of capacity
4.000
100
3.500
90
33
80
3.000
70
2.500
60
2.000
50
1.500
40
1.000
30
500
20
10
0
1
4
7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
Week of year
2022
33
2021
2020
0
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
2021/22
Average of prior 10 years
Range of prior 10 years
Source: (Left) Bruegel, J.P. Morgan Asset Management. (Right) Bloomberg, Gas Infrastructure Europe, J.P. Morgan Asset Management. Past performance is not
a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Global economy
Eurozone focus: Fiscal support and gas prices
34
European and US gas prices
EU recovery fund grants to selected EU countries
EUR billions, labels are % of EU27 2021 nominal GDP
EUR per MWh
90
160
5%
GTM Europe
7%
80
140
70
120
60
100
50
2%
80
40
1%
30
5%
60
11%
20
10
8%
40
1%
1%
1%
20
0
0
'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
US
34
Europe
Source: (Left) European Commission, J.P. Morgan Asset Management. Distribution over time is based on currently approved national plans and J.P. Morgan
Asset Management estimates for countries where approvals have not been completed. Figures shown for EU fiscal stimulus are J.P. Morgan Asset Management
estimates. (Right) Refinitiv Datastream, J.P. Morgan Asset Management. US gas prices are the New York Mercantile Exchange generic one month futures
contract. European gas prices are the Dutch TTF natural gas generic one month futures contract. Past performance is not a reliable indicator of current and future
results. Guide to the Markets - Europe. Data as of 30 June 2022.
Global economy
UK GDP
GTM Europe
Contribution to UK real GDP growth
UK real GDP and composite PMI
% change year on year
30
% change year on year (LHS); index level (RHS)
30
95
20
20
80
10
10
65
0
0
50
-10
-10
35
-20
-20
20
-30
-30
'12
'13
'14
Real GDP
Net exports
35
35
'15
'16
'17
'18
'19
Consumption
Government
'20
'21
'22
Investment
5
'00
'02 '04 '06
Real GDP
'08
'10
'12
'14
Change in inventories
Source: (All charts) ONS, Refinitiv Datastream, S&P Global, J.P. Morgan Asset Management. PMI is Purchasing Managers’ Index where a score of 50 indicates
that economic activity is neither expanding nor contracting, above 50 indicates expansion. PMI data is shown with quarterly frequency. Past performance is not a
reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'16 '18 '20 '22
Composite PMI
Global economy
UK consumer and labour market
Index level (LHS); index level, three-month moving average (RHS)
70
Recession
20
65
10
60
0
55
-10
50
-20
45
-30
40
-40
35
-50
-60
'98
'00 '02 '04 '06
Services PMI
'08
'10
'12
'14 '16 '18 '20 '22
Consumer confidence
36
UK unemployment rate and wage growth
UK consumer confidence and services sector
30
36
GTM Europe
%, wage growth is % change year on year
12
12
9
8
6
4
3
0
0
-4
'85
'89
'93
'97
'01
'05
'09
Unemployment
Source: (Left) Bloomberg, GfK, S&P Global, J.P. Morgan Asset Management. (Right) ONS, Refinitiv Datastream, J.P. Morgan Asset Management. Wage growth is
a three-month moving average of average weekly earnings for the whole economy, including bonuses and arrears. Past performance is not a reliable indicator of
current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'13
'17
'21
Wage growth
Global economy
UK inflation
GTM Europe
UK headline and core inflation
UK headline inflation breakdown
% change year on year
% change year on year
10
10
9
9
8
8
7
7
6
6
5
5
Headline inflation
target
4
4
3
3
2
2
1
1
0
0
-1
'07
'09
Core inflation
'11
'13
'15
Headline inflation
'17
'19
'21
-1
Jan ’21
May ’21
Core services
Electricity & gas
37
37
Sep ’21
Core goods
Jan ’22
May ’22
Food, alcohol & tobacco
Liquid fuels
Source: (All charts) ONS, Refinitiv Datastream, J.P. Morgan Asset Management. CPI is the Consumer Price Index. Core CPI is defined as CPI less energy, food,
alcohol and tobacco. Core goods CPI is defined as goods CPI less energy, food, alcohol and tobacco. Past performance is not a reliable indicator of current and
future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Global economy
UK focus: Fiscal stimulus
GTM Europe
38
Annual gains from fiscal stimulus measures announced in 2022
GBP, equivalised household income vingtile*
1.600
1.400
1.200
1.000
800
600
400
200
0
1
2
Lower income
3
4
February support package
38
5
6
7
8
9
10
Vingtile
Spring statement announcements
11
12
13
14
15
16
May support package
Source: Resolution Foundation, J.P. Morgan Asset Management. *Equivalised household income adjusts the figures to reflect household costs based on
household size and composition. The chart shows the gains expected in fiscal year 2022-2023 as a result of the fiscal stimulus measures announced in the first
half of 2022. Vingtiles split ranked data into 20 equal-size groups based on income. Past performance is not a reliable indicator of current and future results.
Guide to the Markets - Europe. Data as of 30 June 2022.
17
18
19
20
Higher income
Global economy
Japan GDP
GTM Europe
Contribution to Japan real GDP growth
Japan real GDP and manufacturing PMI
% change year on year
% change year on year (LHS); index level (RHS)
12
12
80
8
8
70
4
4
60
0
0
50
-4
-4
40
-8
-8
30
-12
-12
'12
'13
'14
'15
'16
Real GDP
Consumption
Net exports
39
39
'17
'18
'19
Government
'20
'21
Investment
'22
20
'00
'02 '04 '06
Real GDP
'08
'10
'12
'14
'16 '18 '20 '22
Manufacturing PMI
Change in inventories
Source: (All charts) Japan Cabinet Office, Refinitiv Datastream, S&P Global, J.P. Morgan Asset Management. PMI is Purchasing Managers’ Index where a score
of 50 indicates that economic activity is neither expanding nor contracting, above 50 indicates expansion. PMI data is shown with quarterly frequency. Past
performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Global economy
China GDP and business surveys
GTM Europe
Contribution to China real GDP growth
China manufacturing and services PMIs
% change year on year
Index level
20
60
40
55
15
50
10
45
40
5
35
0
30
-5
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Consumption
Investment
Net exports
GDP growth
40
25
Jan ’19 Jul ’19 Jan ’20 Jul ’20
Manufacturing
Services
Jan ’21
Source: (Left) Bloomberg, National Bureau of Statistics of China, Refinitiv Datastream, J.P. Morgan Asset Management. (Right) S&P Global, J.P. Morgan Asset
Management. PMI is Purchasing Managers’ Index where a score of 50 indicates that economic activity is neither expanding nor contracting, above 50 indicates
expansion. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Jul ’21
Jan ’22
Jul ’22
Global economy
China debt and credit dynamics
GTM Europe
41
China debt to GDP ratios
China credit growth and equity performance
% of nominal GDP
% of nominal GDP (LHS); % change year on year, total return (RHS)
180
36
100
160
34
80
32
60
30
40
28
20
26
0
24
-20
22
-40
140
120
100
80
60
40
20
0
20
'00
41
'02 '04 '06 '08
Non-financial corporates
'10 '12 '14
Government
'16 '18 '20
Households
'22
-60
'11
'12 '13 '14
Credit growth
'15
'16
'17
'18
Source: (Left) Bank for International Settlements, Refinitiv Datastream, J.P. Morgan Asset Management. Debt refers to gross debt. (Right) Bloomberg, MSCI
People’s Bank of China, J.P. Morgan Asset Management. Credit growth is the 12-month change in the credit stock to the real economy as a percent of nominal
GDP. MSCI China returns shown in US dollars. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
'19
'20 '21 '22
MSCI China
Global economy
China inflation and policy rates
GTM Europe
42
China inflation
China interbank rate and reserve requirement ratio (RRR)
% change year on year
% rate
7
15
21
6
19
5
17
4
15
3
13
2
11
10
5
0
-5
1
-10
'07
42
'09
'11
'13
'15
'17
Producer price inflation
Headline inflation
'19
'21
Core inflation
9
'07
'09
SHIBOR
'11
'13
'15
'17
Source: (Left) Bloomberg, Refinitiv Datastream, J.P. Morgan Asset Management. CPI is the Consumer Price Index. Core CPI is defined as CPI excluding food and
energy. PPI is the Producer Price Index. (Right) People’s Bank of China, Refinitiv Datastream, J.P. Morgan Asset Management. Average RRR for large and small
banks. SHIBOR is the three-month interbank rate. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
'19
'21
RRR
Global economy
Emerging market structural dynamics
Urbanisation, real GDP per capita and population size
Urbanisation rates over time
Urbanisation rates, %, and GDP per capita, USD, bubble size is population
% of population
100
70.000
43
Forecast
60.000
AUS
USA
90
80
50.000
GDP per capita
CAN
GBR
NLD
70
DEU
40.000
30.000
HKG
FRA JPN
KOR
ITA
ESP
20.000
CHN
IND
0
0
20
40
THA
IDN
ZAF
50
30
ARG
BRA
20
MEX
60
-10.000
Urbanisation rate
Developed markets
60
40
SAU
TUR
RUS
10.000
43
GTM Europe
Emerging markets
80
100
10
0
1960 1970 1980
US
China
1990 2000
India
2010
Source: (All charts) World Bank, J.P. Morgan Asset Management. Urbanisation rate refers to the proportion of the total population living within an urban area
defined by national statistical offices. Countries are labelled using three-letter International Organisation of Standardisation country codes. Forecasts are from
World Bank for 2020 onwards. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
2020
2030
2040
2050
Global economy
Emerging market growth
GTM Europe
Share of global real GDP
Estimated change in the “consumer class” by 2030
%
Millions of people
450
35
44
400
30
350
25
300
250
20
200
15
150
100
10
50
5
0
-50
0
'70
'75
US
44
'80
'85
Eurozone
'90
'95
'00
Japan
India
'05
'10
China
'15
'20
India
China
Other
Asia
US
Eurozone
big 4
Source: (Left) Refinitiv Datastream, World Bank, J.P. Morgan Asset Management. (Right) Brookings Institute, J.P. Morgan Asset Management. Change in
“consumer class” is the change in the number of people from 2020 to 2030 living in a household and spending at least USD 11 per day per person. Other Asia
includes Bangladesh, Indonesia, Pakistan, Philippines and Vietnam. Eurozone big 4 includes France, Germany, Italy and Spain. Past performance is not a reliable
indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
UK
Japan
Global economy
Emerging market focus: Food prices and global trade
% of nominal GDP
200
25%
Saudi Arabia
175
1.500
45
Commodity trade balance
Fertiliser costs and food prices
USD/mt (LHS); index level (RHS)
1.800
GTM Europe
Russia
Brazil
150
1.200
Trade surplus
South Africa
Indonesia
125
900
Mexico
Thailand
100
Poland
Turkey
600
75
India
China
300
50
Philippines
South Korea
0
25
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
Ammonia prices
UN World food price index
45
-10
Raw materials
-5
0
5
10
Energy commodities and products
Source: (Left) Bloomberg, UN, J.P. Morgan Asset Management. (Right) HSBC, UN, J.P. Morgan Asset Management. Past performance is not a reliable indicator
of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
15
20
30
Food
Global earnings expectations and equity valuations
GTM Europe
Consensus estimates for global earnings per share growth
Global forward price-to-earnings ratios
% change year on year
x, multiple
80
40
24
46
77
Equities
35
20
30
16
25
20
12
15
8
10
4
5
0
0
US
Europe
ex-UK
Avg. 2011-2019
UK
2022
Japan
2023
EM
China
US
Europe
ex-UK
Range since 1990
UK
Japan
Average since 1990
Start of 2022
46
Source: (Left) FTSE, IBES, MSCI, Refinitiv Datastream, Standard & Poor’s, TOPIX, J.P. Morgan Asset Management. MSCI indices are used for Europe ex-UK,
EM and China. UK is FTSE All-Share, US is S&P 500 and Japan is TOPIX. (Right) IBES, MSCI, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset
Management. MSCI indices are used for all regions/countries (due to data availability), except for the US, which is represented by the S&P 500. Range and
average for China is since 1996, due to data availability. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
EM
Current
China
Global equity market correlations with Treasury yields
47
Correlation of MSCI ACWI sectors to US 10y Treasury yield
Correlation of regions and styles to US 10y Treasury yield
10y correlation of sector rel. performance with US 10y Treasury yield
10y correlation of rel. performance with US 10y Treasury yield
Financials
Energy
Equities
GTM Europe
Value
Sectors tending to
outperform MSCI ACWI
when yields are rising
Small cap
Industrials
Regions/styles tending to
outperform MSCI ACWI
when yields are rising
Japan
Materials
UK
Cons. Discr.
Eurozone
Utilities
EM
Health Care
China
Real Estate
US
Cons. Staples
IT
Sectors tending to
underperform MSCI ACWI
when yields are rising
Comm. Services
-1,0 -0,8 -0,6 -0,4 -0,2 0,0
47
0,2
0,4
0,6
0,8
1,0
Large cap
Growth
-1,0
Regions/styles tending to
underperform MSCI ACWI
when yields are rising
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6
Country/region
Large/small
Value/growth
Source: (All charts) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Correlation of sectors is calculated between the six-month change in US 10-year
Treasury yields and the six-month relative performance of each sector to MSCI All-Country World Index. Correlation of regions and styles is calculated between
the six-month change in US 10-year Treasury yields and the six-month relative performance of each region and style to MSCI All-Country World Index. All indices
used are MSCI. Value and growth as well as size indices used are for the MSCI All-Country World universe. Past performance is not a reliable indicator of current
and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
0,8
1,0
Global equity sector weights
GTM Europe
48
Global equity sector weights
% of total market cap
30
25
Equities
20
15
10
5
0
IT
US
Health Care
Europe ex-UK
Financials
UK
Cons. Discr.
Comm. Serv.
Industrials
Cons. Staples
Energy
Utilities
Materials
Comm. Serv.
Industrials
Cons. Staples
Energy
Utilities
Materials
EM
MSCI World Growth and Value sector weights
% of total market cap
40
30
20
10
0
IT
Health Care
MSCI World Growth
48
Financials
Cons. Discr.
MSCI World Value
Source: (Top) MSCI, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Indices are all MSCI, except for US, which is S&P 500. (Bottom)
MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Real estate is not included in these sector breakdowns due to the small size of the weight in each
index. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Global equity income
GTM Europe
S&P 500 returns: Capital appreciation and dividends
Global dividend yields
%, annualised returns
% yield
Equities
20
5
15
4
13,6
13,9
12,6
10
15,3
5
4,7
5,4
6,0
3
11,2
3,0
5,1
4,4
1,6
3,3
4,2
0
6,5
4,4
2,5
1,8
2,2
2
1,8
-2,7
-5,3
1
-5
-10
0
Capital
Dividends
Dividendappreciation
returns
Capital
returns
49
Country/region
Large/small
Value/growth
Source: (Left) Ibbotson, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. (Right) MSCI, Refinitiv Datastream, J.P. Morgan Asset
Management. Value and growth as well as size indices used are for the MSCI All-Country World universe. Past performance is not a reliable indicator of current
and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
49
Profit margins
Profit margins
US NFIB survey: Prices and wages
%, margins of 12-month trailing earnings relative to sales
% of respondents, three-month moving average
14
Equities
GTM Europe
50
60
50
12
40
10
30
8
20
6
10
4
0
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
US
Europe ex-UK
UK
'86
'90
'94
'98
'02
'06
% of companies planning to raise prices
% of companies planning to raise wages
50
Source: (Left) FTSE, MSCI, Refinitiv Datastream, Standard & Poor's, J.P. Morgan Asset Management. US: S&P 500, Europe ex-UK: MSCI Europe ex-UK, UK:
FTSE All-Share. (Right) National Federation of Independent Business, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable
indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'10
'14
'18
'22
Equity market factors
S&P 500 Quality/S&P 500 relative performance
MSCI World Growth and Value forward P/E ratios
Relative total return index level, rebased to 100 in 1990
x, multiple
36
Equities
160
150
51
32
Recession
140
28
130
24
120
20
110
16
100
12
90
8
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
51
GTM Europe
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
Growth
Value
Source: (Left) J.P. Morgan Asset Management Quantitative Beta Solutions, Standard & Poor’s, J.P. Morgan Asset Management. S&P 500 Quality index is the top
quartile quality stocks in the S&P 500 determined by JPMAM Quantitative Beta Strategies based on measures of profitability, financial risk and earnings quality.
Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle dates. (Right) MSCI, Refinitiv Datastream, J.P.
Morgan Asset Management. Forward P/E ratio is the price to 12-month forward earnings ratio, as published by MSCI. Past performance is not a reliable indicator
of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
US earnings
GTM Europe
S&P 500 earnings and performance
US inflation and earnings growth
Next 12 months’ earnings per share estimates (LHS); index level (RHS)
Equities
300
5.000
240
Country/Region
US
Asia/Pacific
Europe
180
% of revenues
60%
18%
15%
120
80
8
70
7
60
6
50
5
40
3.000
4
30
3
20
2
10
1
0
0
-10
-1
-20
-2
-30
1.000
0
0
'86
52
% change year on year
9
4.000
2.000
60
52
'90
'94
'98
'02
S&P 500 forward EPS
'06
'10
'14
'18
'22
S&P 500 index level
-3
-40
'86
'90
'94
US inflation
'98
'02
'06
'10
'14
'18
'22
S&P 500 trailing EPS
Source: (Left) FactSet, IBES, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Earnings data is based on 12-month forward estimates.
(Right) BLS, IBES, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Earnings data is last 12 months’ earnings per share. Past
performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
US equity valuations and performance
S&P 500 forward P/E ratio
S&P 500 sector performance year-to-date
x, multiple
%, total return in USD
26
Valuation measure
24
Equities
GTM Europe
Shiller CAPE ratio
P/B ratio
Average
since Latest
1990
26,4x
28,7x
3,0x
3,6x
22
30 Jun 2022:
15,9x
20
18
Average: 16,2x
16
14
12
53
Current P/E ratio
8,4
Energy
19,6
Utilities
20,0
Cons. Staples
15,6
Health Care
15,8
Industrials
12,5
Materials
11,2
Financials
15,9
S&P 500
18,8
IT
14,4
Comm. Serv.
21,4
Cons. Discr.
10
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
53
-40
-20
0
Source: (Left) IBES, Refinitiv Datastream, Robert Shiller, Standard & Poor’s, J.P. Morgan Asset Management. P/E ratio calculated using IBES earnings estimates
for next 12 months. P/E data may differ from Guide to the Markets - US, which uses FactSet earnings estimates. Shiller cyclically adjusted P/E (CAPE) is price-toearnings ratio adjusted using trailing 10-year average inflation-adjusted earnings. P/B ratio is trailing price-to-book ratio. (Right) IBES, Refinitiv Datastream,
Standard & Poor’s, J.P. Morgan Asset Management. Current P/E ratio is price to 12-month forward earnings. Past performance is not a reliable indicator of current
and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
20
40
Equities
US valuations and subsequent returns
54
S&P 500 forward P/E ratios and subsequent 1-year returns
S&P 500 forward P/E ratios and subsequent 10-year returns
%, annualised total return*
%, annualised total return*
60
30
40
20
20
10
0
0
-20
-10
-40
-20
Start of
year
Current level
-60
Start of
year
Current level
-30
8x
54
GTM Europe
11x
14x
17x
20x
23x
26x
8x
11x
14x
17x
Source: (All charts) IBES, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. *Dots represent monthly data points since 1988, which is
earliest available. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
20x
23x
26x
US bull and bear markets
GTM Europe
55
S&P 500 bull markets, %
700
Duration:
22 months
Price return: 114%
600
Equities
500
400
50 months
44 months
86%
80%
26 months
48%
32 months
74%
300
200
100
74 months
126%
61 months
229%
132 months
401%
149 months
582%
60 months
101%
0
'58
'61
'64
'67
'70
'73
'76
'79
'82
'85
'88
'91
'94
'97
'00
'03
'06
'09
'12
'15
'18
'21
S&P 500 bear markets, %
0
-10
1 month
-34%
-20
8 months
6 months -22%
18 months
-28%
-36%
-30
-40
-50
17 months
-57%
3 months
-34%
31 months
-49%
21 months
-48%
-60
'58
55
21 months
-27%
'61
'64
'67
'70
'73
'76
'79
'82
'85
'88
'91
'94
'97
'00
Duration:
6 months
Price return: -21%
'03
'06
'09
Source: (All charts) Bloomberg, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. A bear market represents a 20% or more decline from
the previous market high; a bull market represents a 20% increase from a market trough. Charts and labels refer to price return. Past performance is not a reliable
indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'12
'15
'18
'21
Europe earnings
GTM Europe
MSCI Europe earnings and performance
Eurozone exports and earnings growth
Next 12 months’ earnings per share estimates, EUR (LHS); index level (RHS)
Equities
56
150
2.250
125
1.875
100
% change year on year, eurozone exports is a three-month moving average
50
100
40
80
30
60
20
40
10
20
0
0
1.500
75
1.125
50
750
-10
-20
-20
-40
Country/Region % of revenues
25
Europe
47%
US
21%
Asia/Pacific
20%
0
0
'88 '91 '94 '97 '00 '03
MSCI Europe ex-UK
forward EPS
56
375
'06
'09 '12 '15 '18 '21
MSCI Europe ex-UK
index level
-30
-60
'00
'02
'04
'06
Eurozone exports
'08
'10
'12
'14 '16 '18 '20 '22
MSCI EMU trailing EPS
Source: (Left) FactSet, IBES, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Earnings data is based on 12-month forward estimates. (Right) CPB
Netherlands, IBES, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Earnings data is last 12 months’ earnings per share. MSCI EMU is MSCI
European Monetary Union and represents eurozone equities. Past performance is not a reliable indicator of current and future results.
Guide to the Markets - Europe. Data as of 30 June 2022.
Europe equity valuations
GTM Europe
MSCI Europe forward P/E ratio
MSCI Europe sector performance year-to-date
x, multiple
%, total return in local currency
25
Equities
23
21
Valuation
Average
Latest
measure since 1990
19,3x
17,3x
CAPE ratio
2,1x
1,8x
P/B ratio
57
Current P/E ratio
5,5
Energy
15,0
Comm. Serv.
16,3
Health Care
18,2
Cons. Staples
13,0
Utilities
19
17
15
30 Jun 2022:
11,5x
Average: 14,4x
8,0
Financials
13
11,5
11
8,6
9
11,0
Cons. Discr.
13,7
Industrials
18,3
IT
7
MSCI Europe
Materials
5
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
57
-40
-20
0
Source: (Left) IBES, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. P/E ratio calculated using IBES earnings estimates for next 12 months.
Cyclically adjusted P/E (CAPE) is price-to-earnings ratio adjusted using trailing 10-year average inflation-adjusted earnings. P/B ratio is trailing price-to-book ratio.
(Right) IBES, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Current P/E ratio is price to 12-month forward earnings. Past performance is not a
reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
20
40
Europe large, mid and small capitalisation equities
MSCI Europe large, mid & small cap performance
MSCI Europe large, mid & small cap valuations
Index level, rebased to 100 in Jan 1995
x, 12-month forward price-to-earnings ratio
25
700
58
23
600
Equities
GTM Europe
21
500
19
400
17
300
15
13
200
11
100
9
0
7
'95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21
Mid & small cap
Large cap
58
'95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21
Mid & small cap
Large cap
Source: (All charts) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results.
Guide to the Markets - Europe. Data as of 30 June 2022.
UK earnings
GTM Europe
FTSE All-Share earnings and performance
FTSE All-Share earnings per share growth
Next 12 months’ earnings per share estimates, GBP (LHS); index level (RHS)
400
59
4.600
% change year on year
60
Equities
50
340
4.000
40
30
280
3.400
20
10
220
160
2.800
Country/
% of
Region
revenues
24%
UK
23%
US
20%
Asia/Pacific
17%
Europe ex-UK
100
59
-10
2.200
-20
-30
1.600
'99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21 '23
FTSE All-Share
FTSE All-Share
forward EPS
index level
0
-40
'05
'07
'09
Sales growth
'11
'13
Margin growth
'15
'17
'19
Earnings growth
Source: (All charts) FactSet, FTSE, IBES, Refinitiv Datastream, J.P. Morgan Asset Management. Earnings data are based on 12-month forward estimates. Margin
growth is the growth rate of earnings per share divided by sales per share. Past performance is not a reliable indicator of current and future results.
Guide to the Markets - Europe. Data as of 30 June 2022.
'21
Japan equity market and currency
GTM Europe
TOPIX earnings and performance
TOPIX and the yen vs. US dollar
Next 12 months’ earnings per share estimates, JPY (LHS); index level (RHS)
180
Country/Region
Japan
Asia/Pacific
US
Europe
Equities
160
140
% of revenues
56%
18%
13%
9%
120
3.000
Index level (LHS); Japanese yen per US dollar (RHS)
2.200
70
2.700
2.000
80
1.800
90
1.600
100
1.400
110
1.200
120
1.000
130
2.400
2.100
100
1.800
80
1.500
60
1.200
40
900
20
600
800
300
600
0
'88
60
60
'91 '94 '97 '00 '03
TOPIX forward EPS
'06
'09
'12 '15 '18 '21
TOPIX index level
140
Yen depreciating
150
'00
'02 '04 '06 '08
TOPIX index level
'10
'12
'14
Source: (Left) FactSet, IBES, Refinitiv Datastream, TOPIX, J.P. Morgan Asset Management. Earnings data are based on 12-month forward estimates. (Right)
Refinitiv Datastream, TOPIX, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results.
Guide to the Markets - Europe. Data as of 30 June 2022.
'16 '18 '20 '22
USDJPY (inverted)
Emerging market equity drivers
GTM Europe
EM/DM relative equity performance and growth gap
EM/DM relative equity performance and USD REER
Relative index level (LHS); % point, next 12 months’ growth estimates (RHS)
6
Relative index level (LHS); index level (RHS)
160
75
5
140
85
120
4
120
100
3
100
105
80
2
80
115
60
1
60
125
40
0
40
135
-1
20
160
Equities
140
EM growth & equity
outperformance
20
'97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21
EM / DM relative
EM minus DM
equity performance
GDP growth
61
61
EM equity
outperformance &
USD weakening
95
145
'97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21 '23
EM / DM relative
USD REER (inverted)
equity performance
Source: (Left) Consensus Economics, Refinitiv Datastream, J.P. Morgan Asset Management. “EM minus DM GDP growth” is consensus estimates for emerging
markets growth in the next 12 months minus consensus estimates for developed markets growth in the next 12 months, provided by Consensus Economics.
(Right) J.P. Morgan Securities Research, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. For all charts, EM equity is MSCI Emerging Markets and
DM equity is MSCI World. Relative equity performance is calculated from price indices in USD, and is rebased to 100 in 1997. Past performance is not a reliable
indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Emerging market equity valuations and subsequent returns
62
MSCI EM price-to-book ratio
MSCI EM price-to-book ratio and subsequent 10-year returns
x, multiple
3,0
%, annualised total return*
30
2,8
Equities
GTM Europe
25
2,6
2,4
2,2
20
30 Jun 2022:
1,7x
15
10
2,0
1,8
Average: 1,8x
5
0
1,6
-5
1,4
-10
1,2
Start of
year
Current level
-15
1,0
0,8
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
62
-20
0,8x
1,2x
1,6x
2,0x
Source: (All charts) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. *Dots represent monthly data points since 1996, which is earliest available.
MSCI EM Index returns are in USD. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
2,4x
2,8x
3,2x
Equity focus: Earnings and stock price declines in recessions
GTM Europe
MSCI World earnings and stock market drawdowns
%, drawdown from peak
0
Equities
-10
-20
-30
-40
-50
-60
-70
‘90/’91
Price return
Earnings
63
Dot com
GFC
Covid-19
Source: MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Chart shows the drawdown in 12-month trailing earnings and price returns in US dollars for
MSCI World. GFC is Global Financial Crisis. Earnings and markets may not bottom on the same date. Past performance is not a reliable indicator of current and
future results. Guide to the Markets - Europe. Data as of 30 June 2022.
’22 YTD
63
World stock market returns
EUR
Equities
Local
64
GTM Europe
64
2013
2014
2015
2016
2017
2018
2019
2020
2021
YTD
2Q ’22
10-year
ann.
return
26,7%
US S&P 500
32,4%
29,5%
US S&P 500
13,7%
24,4%
TOPIX
12,1%
15,3%
US S&P 500
12,0%
24,8%
Asia ex-Jp
35,9%
0,4%
US S&P 500
-4,4%
33,9%
US S&P 500
31,5%
15,0%
Asia ex-Jp
22,7%
38,5%
US S&P 500
28,7%
-8,8%
Asia ex-Jp
-12,4%
-3,0%
Asia ex-Jp
-6,1%
18,1%
US S&P 500
16,6%
21,5%
TOPIX
54,4%
19,7%
Asia ex-Jp
7,7%
12,9%
US S&P 500
1,4%
14,9%
MSCI EM
10,1%
21,0%
MSCI EM
31,0%
-6,8%
Portfolio
-9,1%
26,9%
Portfolio
24,5%
8,9%
MSCI EM
19,5%
25,9%
Europe
23,3%
-10,2%
MSCI EM
-13,5%
-5,6%
MSCI EM
-8,0%
12,3%
Portfolio
12,2%
20,5%
Europe
22,3%
16,2%
Portfolio
8,6%
8,8%
Portfolio
2,2%
9,5%
Portfolio
8,5%
12,7%
Portfolio
21,8%
-9,4%
TOPIX
-16,0%
26,9%
Europe
24,6%
8,6%
US S&P 500
18,4%
22,5%
Portfolio
17,8%
-12,2%
Portfolio
-14,3%
-8,2%
Portfolio
-9,9%
10,3%
Europe
10,2%
16,2%
Portfolio
24,1%
11,8%
MSCI EM
5,6%
8,8%
Europe
5,4%
8,9%
Asia ex-Jp
6,4%
11,2%
TOPIX
22,2%
-9,8%
Asia ex-Jp
-12,0%
21,4%
TOPIX
18,1%
4,8%
Portfolio
10,9%
8,8%
TOPIX
12,7%
-12,2%
TOPIX
-4,8%
-8,4%
TOPIX
-3,7%
10,0%
TOPIX
13,0%
-1,1%
Asia ex-Jp
6,2%
10,1%
TOPIX
10,3%
1,5%
Asia ex-Jp
-5,3%
6,6%
TOPIX
0,3%
10,9%
Europe
13,7%
-9,9%
MSCI EM
-9,7%
21,1%
MSCI EM
18,5%
3,7%
TOPIX
7,4%
5,2%
MSCI EM
0,1%
-12,9%
US S&P 500
-20,0%
-8,6%
Europe
-8,3%
9,8%
Asia ex-Jp
8,8%
-6,5%
MSCI EM
3,8%
7,4%
Europe
5,2%
-4,9%
MSCI EM
-5,4%
3,2%
Europe
7,9%
7,0%
US S&P 500
21,8%
-10,0%
Europe
-10,0%
20,7%
Asia ex-Jp
18,2%
-2,8%
Europe
-1,7%
2,8%
Asia ex-Jp
-2,8%
-13,4%
Europe
-13,1%
-10,7%
US S&P 500
-16,1%
7,3%
MSCI EM
8,4%
Source: MSCI, Refinitiv Datastream, Standard & Poor’s, TOPIX, J.P. Morgan Asset Management. Annualised return covers the period 2012 to 2021. Hypothetical
portfolio (for illustrative purposes only and should not be taken as a recommendation): 35% Europe; 30% S&P 500; 15% EM; 10% Asia ex-Japan; 10% TOPIX. All
indices are total return. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Fixed income yields
GTM Europe
65
Fixed income yields
%
14
Developed market
government bonds
Investment-grade bonds
Convertible
bonds
High yield bonds
Emerging market bonds
12
Fixed Income
10
8
6
4
Yield at start
of 2022
2
0
Return correlation to MSCI ACWI
-2
-0,2 -0,2 -0,2 -0,3 0,2
0,5 0,6 0,5 0,6 0,5 0,5 0,5
4,9 4,8 7,4 6,7 7,8 7,0 7,7
65
0,8
0,7 0,7 0,7 0,8 0,8
-0,2 0,5 0,3 0,7 0,6 0,7
Duration (years)
3,3
3,8 5,1 3,8 4,8 4,5
5,4 8,1 4,9 4,5 6,8 5,4
Source: Bloomberg, Bloomberg Barclays, ICE BofA, J.P. Morgan Economic Research, Refinitiv Datastream, J.P. Morgan Asset Management. Return correlation to
MSCI All-Country World Index is calculated using monthly total returns since 2008. Indices used are as follows: Euro IG: Bloomberg Barclays Euro-Aggregate –
Corporate; Global IG: Bloomberg Barclays Global Aggregate – Corporate; UK IG: Bloomberg Barclays Sterling Aggregate – Corporate; US IG: Bloomberg
Barclays US Aggregate – Corporate; Convertible bonds: Bloomberg Barclays Global Convertible Rate Sensitive hedged to USD; Euro HY: ICE BofA Euro
Developed Markets Non-Financial High Yield Constrained Index; Global HY: ICE BofA Global High Yield Index; US HY: ICE BofA US High Yield Constrained
Index; EMD corporate: CEMBI Broad Diversified; EMD local: GBI-EM Global Diversified; EMD local – China: JP Morgan GBI-EM Broad Diversified China; EMD
sovereign: EMBI Global Diversified; EMD sov. IG: EMBI Global Diversified IG; EMD sov. HY: EMBI Global Diversified HY. Past performance is not a reliable
indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Fixed Income
Global government bond yields
GTM Europe
Nominal 10-year government bond yields
US 10-year Treasury yield breakdown
% yield
%
6
6
5
5
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
US
UK
Germany
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
US 10-year Treasury yield
US 10-year breakeven
US 10-year real yield
66
66
Source: (All charts) Refinitiv Datastream, J.P. Morgan Asset Management. 10-year breakeven represents the difference in yield between nominal and inflationprotected government bonds, and is a market-based measure of average inflation expectations over the next 10 years. Past performance is not a reliable indicator
of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
US yield curve
GTM Europe
67
US yield curve
Yield curve inversion and recessions
Basis points, 10-year Treasury yield minus 2-year Treasury yield
Number of months from
300
Recession
Fixed Income
200
100
Yield
curve
inversion
date
Curve
inversion
to S&P
500 peak
before
recession
S&P 500
peak to
start of
recession
Curve
inversion
to
recession
Aug ’78
18
0
18
Sep ’80
3
8
11
Dec ’88
19
1
20
May ’98
22
12
34
Dec ’05
22
3
25
Median
19
3
20
Average
17
5
22
0
-100
-200
-300
'77
67
'82
'87
'92
'97
'02
'07
'12
'17
'22
Source: (Left) Refinitiv Datastream, J.P. Morgan Asset Management. (Right) Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Periods of
“recession” are defined using US National Bureau of Economic Research (NBER) business cycle dates. Past performance is not a reliable indicator of current and
future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Fixed Income
Investment-grade bonds
GTM Europe
US investment-grade spread
Euro and UK investment-grade spreads
%, option-adjusted spread over US government bond yield
%, option-adjusted spread over local government bond yield
7
7
6
6
5
5
4
4
3
3
2
2
1
1
0
0
'01
68
68
'03
'05
'07
'09
'11
'13
'15
'17
'19
'21
'01
'03
UK
'05
'07
Euro
'09
'11
'13
Source: (Left) Bloomberg Barclays, Refinitiv Datastream, J.P. Morgan Asset Management. Index is Bloomberg Barclays US Aggregate – Corporate. (Right)
Bloomberg Barclays, Refinitiv Datastream, J.P. Morgan Asset Management. Indices are Euro inv. grade: Bloomberg Barclays Euro Aggregate – Corporate; UK
inv. grade: Bloomberg Barclays Sterling Aggregate – Corporate. Past performance is not a reliable indicator of current and future results.
Guide to the Markets - Europe. Data as of 30 June 2022.
'15
'17
'19
'21
High yield bonds
GTM Europe
Euro high yield spread and defaults
US high yield spread and defaults
%, default rate (LHS); %, option-adjusted spread (RHS)
16
24
Fixed Income
12
%, default rate (LHS); %, option-adjusted spread (RHS)
34%
20
40
25
16
20
12
15
8
10
4
5
18
8
12
4
6
0
0
'00
69
69
'02 '04 '06
Default rate
'08
'10
'12
'14
'16
'18 '20 '22
Spread
0
0
'00
'02 '04 '06
Default rate
'08
'10
'12
'14
Source: (Left) ICE BofA, J.P. Morgan Securities Research, Refinitiv Datastream, J.P. Morgan Asset Management. US HY: ICE BofA US High Yield Constrained.
US HY default rate is defined as the par value percentage of the total market trading at or below 50% of par value and includes any Chapter 11 filing,
prepackaged filing or missed interest payments. (Right) Bloomberg, ICE BofA, J.P. Morgan Securities Research, J.P. Morgan Asset Management. Euro HY: ICE
BofA Euro Developed Markets Non-Financial High Yield Constrained Index. Euro HY defaults occur when bonds are downgraded to C rating. The calculation
universe is based on par value percentage of the EUR and GBP HY Non-Financials Corporate bond universe. Defaults include missed coupon payments,
restructuring and distressed exchanges. 2022 default rate is for the last 12 months. Past performance is not a reliable indicator of current and future results.
Guide to the Markets - Europe. Data as of 30 June 2022.
'16
'18
'20 '22
Spread
Emerging market bonds
GTM Europe
70
Corporate and sovereign EMD spreads
Yields and correlations of fixed income returns to equities
%, spread over 10-year US Treasury
% yield and 10-year correlation of monthly returns with MSCI ACWI
10
14
9
Asia HY
(USD)
12
10
$ EMD
8
6
EU HY
6
5
China
Gov.
4
4
2
3
China IG
(USD)
Asia IG
(USD)
Asia Gov.
(USD)
US
Treasury
UK Gilt
EU Gov.
0
2
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
EM corporates USD
EM sovereigns local
EM sovereigns USD
70
US HY
7
Yield
Fixed Income
8
-0,4
-0,2
0,0
0,2
0,4
0,6
0,8
Correlation to MSCI All-Country World
Source: (Left) Bloomberg, J.P. Morgan Asset Management. EM sovereigns local: J.P. Morgan GBI-EM Global Diversified; EM sovereigns USD: J.P. Morgan EMBIG Diversified; EM
corporates USD: J.P. Morgan CEMBI Broad Diversified. (Right) Bloomberg Barclays, ICE BofA, J.P. Morgan Economic Research, MSCI, Refinitiv Datastream, J.P. Morgan Asset
Management. Indices used are as follows: US Treasury: Bloomberg Barclays US Agg. Gov. – Treasury; UK Gilts: Bloomberg Barclays Sterling Gilts; Euro Gov.: Bloomberg Barclays Euro
Agg. Government; Euro HY: ICE BofA Euro Developed Markets Non-Financial High Yield Constrained; US HY: ICE BofA US High Yield Constrained; Asia HY: J.P. Morgan Asia Credit
(JACI) Non-Investment Grade; Asia IG: JACI Investment Grade; Asia Govt.: J.P. Morgan JADE Broad - Asia Diversified Broad; China IG: J.P. Morgan CEMBI IG+ China; China Gov.:
JPM GBI-EM Broad Diversified China; EMD: J.P. Morgan EMBIG Diversified (USD); Global HY: ICE BofA Global High Yield (USD); Global IG: Bloomberg Barclays Global Aggregate –
Corporates (USD). Indices are in local currency unless specified otherwise. Correlations are based on 10 years of monthly total returns against the MSCI ACWI total return. Past
performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
1,0
Fixed income focus: US government bond risk and reward
GTM Europe
71
US 10-year Treasury term premium
Total return scenarios for US 10-year Treasuries by yield
Adrian, Crump & Moench US 10-year Treasury term premium
%
25
6
20
5
15
Fixed Income
4
10
3
5
2
0
1
-5
-10
0
-15
-1
-20
1%
-2
'62 '66 '70 '74 '78 '82 '86 '90 '94 '98 '02 '06 '10 '14 '18 '22
At end of 2022
71
2%
3%
Yield at year end
At end of 2023
Source: (Left) Bloomberg, Federal Reserve Bank of New York, J.P. Morgan Asset Management. Term premium is defined as the compensation that investors
require for bearing the risk that interest rates may change over the life of the bond, accounting for the uncertainty in the future path of real rates and inflation.
(Right) Bloomberg, J.P. Morgan Asset Management. Chart indicates the calculated total return achieved by purchasing US 10-year Treasuries at the current yield
and selling at the end of 2022 and 2023 for various year-end yields. For illustrative purposes only. Past performance is not a reliable indicator of current and future
results. Guide to the Markets - Europe. Data as of 30 June 2022.
4%
5%
Global fixed income spreads and returns
GTM Europe
%, option-adjusted spread
2021
YTD
2Q ’22
5,0%
Euro Gov
5,0%
13,4%
US HY
5,3%
-1,2%
US Treas.
-9,1%
2,4%
US Treas.
-3,8%
8,1%
US HY
6,7%
2,7%
US HY
-2,3%
16,6%
US IG
14,5%
3,1%
Infl Linked
3,1%
6,5%
US IG
-1,0%
-6,1%
Infl Linked
-6,1%
-1,3%
US IG
-7,3%
6,7%
EM Debt
5,3%
2,4%
US IG
-2,5%
16,5%
US HY
14,4%
2,8%
Euro IG
2,8%
6,4%
Infl Linked
6,4%
-6,5%
US HY
-14,0%
-4,2%
US HY
-10,0%
6,6%
Euro HY
6,6%
1,3%
Portfolio
-1,4%
11,2%
Portfolio
10,1%
2,2%
Euro HY
2,2%
5,7%
EM Debt
-1,8%
-6,9%
US IG
-14,4%
-4,6%
Portfolio
-7,9%
6,1%
US IG
4,7%
1,0%
Euro Gov
1,0%
10,9%
Euro HY
10,9%
0,9%
Portfolio
5,8%
5,1%
US Treas.
-2,3%
-8,9%
Portfolio
-13,0%
-5,7%
EM Debt
-11,4%
5,2%
Portfolio
4,3%
0,6%
EM Debt
-4,3%
8,8%
US Treas.
6,9%
0,8%
US IG
9,9%
3,9%
Portfolio
-0,2%
-11,9%
Euro IG
-11,9%
-7,3%
Euro IG
-7,3%
4,0%
Euro Gov
4,0%
-1,3%
Euro IG
-1,3%
6,8%
Euro Gov
6,8%
-0,9%
US Treas.
8,0%
3,4%
Euro HY
3,4%
-12,3%
Euro Gov
-12,3%
-7,4%
Euro Gov
-7,4%
3,7%
Euro IG
3,7%
-1,5%
Infl Linked
-1,5%
6,6%
Infl Linked
6,6%
-2,7%
US HY
6,1%
-1,0%
Euro IG
-1,0%
-13,3%
EM Debt
-20,3%
-7,5%
Infl Linked
-7,5%
3,5%
US Treas.
2,1%
-4,0%
Euro HY
-4,0%
6,2%
Euro IG
6,2%
-3,4%
EM Debt
5,3%
-3,5%
Euro Gov
-3,5%
-15,3%
Euro HY
-15,3%
-11,6%
Euro HY
-11,6%
3,2%
Infl Linked
3,2%
€
5,9%
US Treas.
LCL 0,9%
9
8
Fixed Income
2020
17,2%
EM Debt
15,0%
2018
10
7
6
5
4
3
2
1
0
US IG
UK IG
Range since 2010
72
2019
10-year
ann.
return
Fixed income returns
Fixed income spreads
Euro IG
EMD
US HY
(USD Sov.)
Current spread
Euro HY
Spread at start of 2022
72
Source: (All charts) Bloomberg, Bloomberg Barclays, ICE BofA, J.P. Morgan Economic Research, Refinitiv Datastream, J.P. Morgan Asset Management. UK IG:
Bloomberg Barclays Sterling Agg. – Corporates; US HY: ICE BofA US High Yield Constrained; EM Debt: J.P. Morgan EMBI Global Diversified; Euro HY: ICE BofA
Euro Developed Markets Non-Financial High Yield Constrained; US IG: Bloomberg Barclays US Agg. – Corporate – Investment Grade; US Treasuries: Bloomberg
Barclays US Agg. Gov. – Treasury; Euro IG: Bloomberg Barclays Euro Agg. – Corporate; Euro Gov.: Bloomberg Barclays Euro Agg. Government; Infl Linked:
Bloomberg Barclays Euro Gov. Inflation-Linked. Hypothetical portfolio (for illustrative purposes only and should not be taken as a recommendation): 20% Euro
Gov.; 15% US Treasuries; 10% Linkers; 15% US IG; 10% Euro IG; 10% US HY; 5% Euro HY; 15% EM Debt. Annualised return covers period 2012 to 2021.
Returns are unhedged in euros and local currencies. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
Oil
GTM Europe
73
Crude oil production by country
WTI crude oil price and US rig count
USD/barrel (LHS); number of rigs (RHS)
Million barrels per day
160
2.400
140
2.100
20
18
16
120
1.800
Other assets
14
100
1.500
80
1.200
60
900
12
10
8
6
40
600
4
20
300
0
0
'07
'09
Oil price
'11
'13
'15
'17
'19
'21
Oil rigs
2
0
'07
US
'09
'11
Russia
'13
'15
'17
'19
Saudi Arabia
Iran
Venezuela
OPEC (ex-Saudi Arabia, Iran & Venezuela)
73
Source: (Left) Baker Hughes, Bloomberg, J.P. Morgan Asset Management. (Right) EIA, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance
is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'21
Commodities
GTM Europe
74
Commodity prices
Real US 10-year Treasury yield vs. gold
%, inverted (LHS); $ per Troy ounce (RHS)
Index level, rebased to 100 in Jan 2007
-1,5
2.100
275
250
-1,0
1.900
225
200
Other assets
-0,5
1.700
175
150
0,0
1.500
125
0,5
1.300
100
75
1,0
1.100
50
25
1,5
900
'12
74
'13 '14 '15 '16 '17 '18
Real 10-year Treasury yield
'19
'20
'21 '22
Gold
0
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
Crude oil
Agriculture
Industrial metals
Source: (Left) Refinitiv Datastream, J.P. Morgan Asset Management. Real yield is the US 10-year Treasury inflation-protected security yield. (Right) Bloomberg,
J.P. Morgan Asset Management. Industrial metals include aluminium, copper, nickel and zinc. Agriculture includes coffee, corn, soybeans, soybean oil, sugar and
wheat. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Alternative sources of diversification
GTM Europe
Hedge fund style returns during bear markets
Macro hedge fund relative performance & volatility
Index level (LHS); % change year on year (RHS)
60
80
% total return
30
20
50
60
10
40
40
0
Other assets
-10
30
20
20
0
-20
-30
-40
10
-20
0
-40
'00
'03
VIX
75
'06
'09
'12
'15
'18
'21
Macro hedge fund relative
performance to MSCI Europe
2000 bear market
2008 bear market
2022 year-to-date
Source: (Left) CBOE, Hedge Fund Research Indices (HFRI), MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Macro hedge fund (total return in USD)
relative performance is calculated relative to MSCI Europe (total return in local currency). VIX is the implied volatility of S&P 500 Index based on options pricing.
(Right) Hedge Fund Research Indices (HFRI), Refinitiv Datastream, J.P. Morgan Asset Management. 2000 bear market is from 31 March 2000 to 31 October
2002, 2008 bear market is from 31 October 2007 to 28 February 2009, 2020 bear market is from 31 January 2020 to 30 April 2020. Hedge fund strategies are
defined in the HFRI hedge fund strategy classification system. Past performance is not a reliable indicator of current and future results.
Guide to the Markets - Europe. Data as of 30 June 2022.
2020 bear market
75
Alternative investments: Real assets
GTM Europe
Global core infrastructure returns
Expected returns and volatility in coming 10-15 years
%, rolling 4-quarter returns from income and capital appreciation
% annual compound return in EUR
6
60% Eurozone large cap
10% Euro government bonds
10% European core real estate
5
10% Global infrastructure equity
10% Macro hedge funds
20
15
Compound return
4
Other assets
10
5
76
100% Eurozone
large cap
60% Eurozone large cap
40% Euro government bonds
3
2
0
1
100% Euro government bonds
-5
0
'09
76
'10 '11
Income
'12 '13 '14 '15 '16
Capital appreciation
'17
'18
'19
'20
'21
0
2
4
6
8
10
Volatility
Source: (Left) MSCI, J.P. Morgan Asset Management. Infrastructure returns represented by the “low risk” category of the MSCI Global Quarterly Infrastructure
Asset Index. Data show rolling one-year returns from income and capital appreciation. The chart shows the full index history, beginning in the first quarter of 2009.
(Right) 2022 Long-Term Capital Market Assumptions, J.P. Morgan Multi-Asset Solutions, J.P. Morgan Asset Management. The resulting projections include only
the benchmark return associated with the portfolio and do not include alpha from the underlying product strategies within each asset class. Macro hedge fund
return expectations are currency hedged. The assumptions are presented for illustrative purposes only. Past performance and forecasts are not reliable indicators
of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
12
14
16
18
Asset return expectations
GTM Europe
77
2022 Long-Term Capital Market Assumptions expected returns in coming 10-15 years
%, annualised return in EUR
Eurozone large cap
Asia ex-Japan
Emerging markets
Japan
Other assets
European core real estate
Global infrastructure
US large cap
Euro investment-grade corporate bonds
Euro government bonds
Euro government inflation-linked bonds
Euro cash
0
77
1
Equity
2
3
4
Fixed income
5
6
7
Alternatives
8
9
10
11
12
Historical return since 2009
13
14
Source: 2022 Long-Term Capital Market Assumptions, J.P. Morgan Multi-Asset Solutions, J.P. Morgan Asset Management. Returns are nominal and in EUR. Past
returns are calculated from the start of 2009 up to the end of October 2021, or the most recent available data. The projections in the chart above are based on J.P.
Morgan Asset Management’s proprietary long-term capital market assumptions (10-15 years) for returns of major asset classes. The resulting projections include
only the benchmark return associated with the portfolio and do not include alpha from the underlying product strategies within each asset class. The assumptions
are presented for illustrative purposes only. Past performance and forecasts are not reliable indicators of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
15
16
17
18
Impact of climate concerns on consumer choices
GTM Europe
Willingness to pay more for environmentally friendly products
Seats held by green parties in EU Parliament
% of survey respondents
% of total EU Parliament seats
12
70
60
78
10
50
8
40
6
30
ESG
4
20
2
10
0
0
Germany
Agree
78
US
UK
Australia
'79
'84
'89
'94
'99
'04
Disagree
Source: (Left) YouGov, J.P. Morgan Asset Management. Respondents identified as being mainly or partly responsible for grocery shopping for their household,
and were responding to the statement “I don’t mind paying more for products that are good for the environment.” Survey conducted in April 2021. (Right)
European Parliament, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
'09
'14
'19
Emissions targets and labour share of income
GTM Europe
Greenhouse gas emission targets
Labour share of income
Billion tonnes/year, CO2 equivalent
% of nominal GDP
60
18
16
Current Illustrative path to
policy
net zero targets
forecasts
79
55
14
12
50
10
8
45
ESG
6
4
40
2
0
1990
2000
2010
2020
China
US
EU
79
35
2030
2040
2050
2060
'50
US
'60
'70
Germany
'80
UK
'90
Source: (Left) Climate Action Tracker, J.P. Morgan Asset Management. Current policy forecast is the September 2021 forecast provided by Climate Action Tracker
for the US and EU, and the May 2022 forecast for China. CO2 equivalent tonnes standardise emissions to allow for comparison between gases. One equivalent
tonne has the same warming effect as one tonne of CO2 over 100 years. (Right) BEA, Deutsche Bundesbank, German Federal Statistics Office, ONS, Refinitiv
Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
'00
'10
'20
Carbon pricing
GTM Europe
Global emissions covered by carbon pricing initiatives
Emissions trading system prices
% of global greenhouse gas emissions
USD per tonnes of CO2 equivalent
120
25
80
100
20
80
15
60
10
ESG
40
5
20
0
0
'00 '02
Other
'04 '06
EU ETS
'08 '10 '12 '14
Japan carbon tax
'16 '18 '20 '22
South Korea ETS
'15
EU
'16
'17
South Korea
'18
'19
China
China ETS
80
Source: (Left) World Bank, J.P. Morgan Asset Management. ETS is emissions trading system. (Right) International Carbon Action Partnership, J.P. Morgan Asset
Management. China ETS price is based on the average of Beijing, Chongqing, Guangdong, Hubei, Shanghai, Shenzhen and Tianjin ETS prices. CO2 equivalent
tonnes standardise emissions to allow for comparison between gases. One equivalent tonne has the same warming effect as one tonne of CO2 over 100 years.
Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'20
'21
'22
Global CO2 emissions by country
GTM Europe
Share of global CO2 emissions by country
Global CO2 emissions per capita
%, 2020
Tonnes, 2020
16
100
33
81
14,2
80
12
7
5
3
10,8
60
8
8,2
8
14
7,4
40
5,7
ESG
31
4
20
1,8
0
0
China
81
US
UK & EU
India
Russia
Japan
Other
US
Russia
Japan
China
Source: (All charts) Gapminder, Global Carbon Project, Our World in Data, United Nations, J.P. Morgan Asset Management. CO 2 emissions are from the burning
of fossil fuels for energy and cement production. Emission impact from land use change (such as deforestation) is not included. Past performance is not a reliable
indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
UK & EU
India
Global greenhouse gas emissions and energy costs
GTM Europe
Share of global greenhouse gas emissions by sector
Energy costs from different sources
% of global greenhouse gas emissions (2016), CO2 equivalent tonnes
Mean LCOE*, 2021, US dollars per megawatt hour
400
82
Agriculture: 18%
Energy in
industry: 24%
350
300
250
Wastewater /
landfill: 3%
Chemicals /
cement: 5%
200
ESG
150
100
Other
energy:
15%
Energy in
buildings:
18%
50
0
Energy in transport: 16%
82
'09
'10
Coal
'11 '12 '13
Natural gas
'14 '15 '16 '17
Solar
Wind
Source: (Left) Climate Watch, Our World in Data, World Resource Institute, J.P. Morgan Asset Management. Greenhouse gas emissions include CO2, methane,
nitrous oxide and fluorinated greenhouse gases. CO2 equivalent tonnes standardise emissions to allow for comparison between gases. One equivalent tonne has
the same warming effect as one tonne of CO2 over 100 years. (Right) Lazard, J.P. Morgan Asset Management. *LCOE is levelised cost of energy, the net present
value of the unit-cost of electricity over the lifetime of a generating asset. It is often taken as a proxy for the average price that the generating asset must receive in
a market to break even over its lifetime. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
'18
'19
'20
'21
Global energy mix and energy transition investment
Global energy mix
% primary energy consumption
GTM Europe
83
Global investment in clean energy and energy efficiency
Global net zero
2050 forecast
USD billions
2.500
100
Acceleration required by
2030 to align with Paris
Agreement goals
90
2.000
80
70
1.500
60
50
1.000
ESG
40
30
500
20
10
0
0
'70
83
'80
'90
'00
'10
'20
'30
Oil
Coal
Natural gas
Nuclear and hydro
'40
'50
Renewables
'15
'16
'17
'18
'19
Source: (Left) BP Energy Outlook 2020, J.P. Morgan Asset Management. Forecast is based on BP’s scenario for global net zero emissions by 2050. (Right)
International Energy Agency (2021), World Energy Investment 2021, J.P. Morgan Asset Management. 2030 forecast based on annual average investment needs
in the electricity sector for 2026-2030 in the International Energy Agency’s “net zero emissions by 2050” scenario. For illustrative purposes only. Past performance
is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'20
'21E
'30E
Global energy consumption
GTM Europe
Global energy mix of selected countries
Oil consumption per capita of selected countries
% primary energy consumption
Thousand MWh per person per year, average oil consumption
84
32
India
28
China
Italy
24
US
20
ESG
UK
16
Germany
Spain
12
France
8
0
Oil
84
20
Coal
40
Natural gas
60
Nuclear
80
100
Renewables
'65
'70 '75
Germany
'80 '85
France
'90 '95
Italy
'00
UK
Source: (All charts) Our World in Data, J.P. Morgan Asset Management. Renewables includes hydro, wind, solar and other renewables. MWh is megawatt hours.
Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'05
'10
'15
'20
Importance of governance and social issues
GTM Europe
85
Average ROE of global stocks by governance score
Corporate mentions of “diversity”/“inclusion” in earnings calls
%, return on equity (ROE)
Number of mentions for MSCI ACWI companies, four-quarter moving average
400
14
12
350
10
300
8
250
6
ESG
200
4
150
2
100
0
1st
85
2nd
3rd
Governance score quartiles
4th
'11
'12
'13
'14
'15
'16
'17
'18
Source: (Left) Bloomberg, MSCI, J.P. Morgan Asset Management. Global stocks are represented by MSCI All-Country World Index constituents based on data
availability. We group constituents into quartiles based on proprietary analysis of governance arrangements by J.P. Morgan Asset Management, and then
calculate an equally weighted average return on equity for each group. (Right) MSCI, J.P. Morgan Asset Management. Past performance is not a reliable indicator
of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'19
'20
'21
'22
ESG and capital markets
GTM Europe
86
Global sustainable, social and green bond issuance
Spread between green and traditional corporate bonds
USD billions
Basis points, spread difference between green and traditional bonds
6
900
800
4
700
2
600
500
0
400
-2
ESG
300
-4
200
-6
100
0
'12
'13
'14
'15
'16
Green bonds
Social bonds
86
'17
'18
'19
'20
Sustainable bonds
'21
-8
Jan ’19
Green bonds
trading at a
premium/lower
spread vs.
traditional bonds
Jul ’19
Jan ’20
Jul ’20
Jan ’21
Jul ’21
Source: (Left) Climate Bonds Initiative, J.P. Morgan Asset Management. Green bonds are those where 100% of the net bond proceeds are allocated to green
projects. Social bonds are those where the bond proceeds have a focus on delivering positive social outcomes. Sustainable bonds are those where the bond
proceeds are directed to a mix of both green and social projects or if the bond coupon/characteristics can vary based on achieving predefined sustainability
targets. (Right) Barclays Research, J.P. Morgan Asset Management. Data shown is for a Barclays Research custom universe of green and non-green investmentgrade credits, matched by issuer, currency, seniority and maturity. The universe consists of 164 pairs, 99 euro-denominated, 61 dollar-denominated and 4 sterlingdenominated and 88 financials and 76 non-financials. Spread difference is measured using the option-adjusted spread. Past performance is not a reliable indicator
of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Jan ’22
Jul ’22
Sustainable investment flows and assets under management
ESG
87
Net industry flows into mutual funds and ETFs
Industry mutual fund and ETF assets under management
%, proportion of annual net flows for European-domiciled funds
%, proportion of mutual fund and ETF AUM for European-domiciled funds
100
100
90
90
80
80
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
2017
2018
Classified as sustainable
87
GTM Europe
2019
2020
2021
Not classified as sustainable
2017
2018
Classified as sustainable
2019
2020
2021
Not classified as sustainable
Source: (All charts) Morningstar, J.P. Morgan Asset Management. “Classified as sustainable” refers to funds that have the “Sustainable Investment – Overall” tag
in the Morningstar database. Morningstar classifies “sustainable investment” as a fund that explicitly indicates any kind of sustainability, impact or ESG strategy in
its prospectus or offering documents. Universe for flows and assets under management (AUM) covers all European-domiciled mutual funds and ETFs in the
Morningstar database excluding money market funds and fund of funds. “ETF” refers to exchange-traded fund. Past performance is not a reliable indicator of
current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Life expectancy
GTM Europe
Probability of reaching ages 80 and 90
% probability, persons aged 65, by gender and combined couple
100
92
90
80
76
67
70
60
51
50
40
35
Investing principles
30
88
24
20
10
0
80 years
Men
Women
90 years
Couples - at least one lives to specified age
Source: ONS 2018-2020 Life Tables, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results.
Guide to the Markets - Europe. Data as of 30 June 2022.
88
The effect of compounding
GTM Europe
€5.000 invested annually with 5% growth per year
€5.000 investment with/without income reinvested
EUR
EUR, MSCI Europe returns
100.000
700.000
€639.000
89
€85.700
90.000
600.000
80.000
500.000
70.000
60.000
400.000
€354.000
50.000
300.000
40.000
€28.400
30.000
Investing principles
200.000
89
20.000
100.000
10.000
0
0
25
30
35
40
45
50
55
Starting at age 25
Starting at age 35
60
65
'86
'90
'94
'98
'02
With dividends reinvested
'06
'10
'14
'18
'22
Without dividends reinvested
Source: (Left) J.P. Morgan Asset Management. For illustrative purposes only, assumes all income reinvested, actual investments may incur higher or lower growth
rates and charges. (Right) Bloomberg, MSCI, J.P. Morgan Asset Management. Based on MSCI Europe Index and assumes no charges. Past performance is not a
reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
Cash investments
GTM Europe
90
Income generated by €100.000 in a three-month bank deposit
Effect of 2% inflation on purchasing power of €100.000
EUR
EUR, thousands
€100.000
100
4.500
90
4.000
80
3.500
70
3.000
60
2.500
€45.000
50
2.000
40
1.500
Investing principles
30
90
1.000
20
500
10
0
0
2001
Bank deposit income
2021
Income required to beat inflation
0
5
10
15
20
Years
25
Source: (Left) Eurostat, Refinitiv Datastream, J.P. Morgan Asset Management. Data shown are averages over the course of the calendar year.
(Right) J.P. Morgan Asset Management. For illustrative purposes only, assumes no return on cash and an inflation rate of 2%. Past performance is not a reliable
indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
30
35
40
Long-term asset returns
GTM Europe
91
Total return of $1 in real terms
USD, log scale for total returns
10.000
1.000
Annualised real returns
1900-2021 2000-2021
Equities
6,9%
5,2%
Bonds
2,2%
5,0%
Cash
0,5%
-0,7%
Equities: $3.500
100
Bonds: $15
10
Investing principles
Cash: $2
91
1
0
1900
Cash
Bonds
1920
Equities
1940
1960
1980
2000
Source: Bloomberg, Bloomberg Barclays, FactSet, Shiller, Siegel, Standard & Poor’s, J.P. Morgan Asset Management. Pre-2010 returns: Shiller, Siegel; from
2010: Equities: S&P 500; Bonds: Bloomberg Barclays US Treasury 20+ year Total Return Index; Cash: Bloomberg Barclays US Treasury Bills Total Return Index.
Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
2020
Annual returns and intra-year declines
GTM Europe
92
MSCI Europe intra-year declines vs. calendar-year returns
%, despite average intra-year drops of 15,4% (median 12,0%), annual returns are positive in 32 of 42 years
50
39
40
35
34
34
30
YTD
28
28
20
16
15
13
20
22
21
23
22
6
2
12
9
3
20
20
18
16
12
13
10
17
20
10
2 2 4
4
-15
0
-10
-20
-7
-11
-4
-3
-4
-11
-10
-11
-15
Investing principles
-18
92
-4
-4 -8 -6 -5
-6
-11
-19
-18
-9
-12
-16
-8
-12
-15
-15
-13
-12-12
-17
-15
-5
-7
-18
-17
-22
-35
-25
-26
-31
-31
-40
-12
-12 -12
-18
-24
-30
-4
-6
-35 -37
-34
-41
-50
-48
-60
'80
'82
'84
'86
Calendar-year return
'88
'90
'92
Intra-year decline
'94
'96
'98
'00
'02
'04
'06
'08
'10
'12
'14
Source: MSCI, Refinitiv Datastream, J.P Morgan Asset Management. Returns are local currency price returns. Intra-year decline refers to the largest market fall
from peak to trough within the calendar year. Returns shown are calendar years from 1980 to 2021. 2022 is year-to-date. Past performance is not a reliable
indicator of current and future results. Guide to the Markets - Europe. Data as of 30 June 2022.
'16
'18
'20
'22
Asset class risk-return trade-off
GTM Europe
93
Historic risk vs. return for selected asset classes
%, annualised return 2004 – 2021 in EUR
Higher return
10
Global equities
9
8
Compound return
7
Global high yield bonds
Emerging market debt
6
Global investment-grade bonds
5
Euro government bonds
4
Investing principles
3
93
2
Cash
1
0
0
2
4
6
8
10
Volatility
12
Higher risk
14
Source: Bloomberg Barclays, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Volatility is the standard deviation of annual returns since 2004. Cash:
JP Morgan Cash EUR (3M); Euro government bonds: Bloomberg Barclays Euro Aggregate - Treasury; Global investment-grade bonds: Bloomberg Barclays
Global Aggregate – Corporate; Emerging market debt: J.P. Morgan EMBI Global Diversified; Global high yield bonds: ICE BofA Global High Yield; Global equities:
MSCI All-Country World Index (includes developed and emerging markets). Past performance is not a reliable indicator of current and future results.
Guide to the Markets - Europe. Data as of 30 June 2022.
16
18
S&P 500 and fund flows
GTM Europe
94
US mutual fund and ETF flows and S&P 500
Investing principles
USD billions, three-month net flows (LHS); index level (RHS)
94
200
5.000
150
4.375
100
3.750
50
3.125
0
2.500
-50
1.875
-100
1.250
-150
625
Avoid selling at the bottom
-200
0
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
3-month net fund flows
S&P 500 index level
Source: FactSet, Investment Company Institute, Standard & Poor’s, J.P. Morgan Asset Management. Fund flows are US long-term equity fund flows with ETF
flows included from 2006 onwards. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
US asset returns by holding period
GTM Europe
Range of equity and bond total returns
%, annualised total returns, 1950-present
75
61%
49%
48%
50
30%
24%
25
24%
21%
0
-3%
Investing principles
-7%
95
17%
1%
1%
18%
13%
4%
1%
-3%
-18%
-25
-50
-1%
17%
-24%
-43%
-43% 1-yr
rolling
Large cap equity
Bonds
5-yr.
rolling
10-yr.
rolling
50/50 portfolio
Source: Strategas/Ibbotson, J.P. Morgan Asset Management. Large cap equity represents the S&P 500 Composite and Bonds represents the Strategas/Ibbotson
US Government Bond Index and US Long-term Corporate Bond Index. Returns shown are per annum and are calculated based on monthly returns from 1950 to
latest available and include dividends. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
20-yr.
rolling
15%
4%
95
Investing principles
Asset class returns (EUR)
96
GTM Europe
96
2013
2014
2015
2016
2017
2018
2019
2020
2021
YTD
2Q ’22
10-year
ann.
return
DM equities
21,9%
REITs
44,8%
REITs
13,9%
HY bonds
18,2%
EM equities
21,0%
Govt bonds
4,6%
DM equities
30,8%
EM equities
8,9%
REITs
50,5%
Cmdty
28,8%
Hedge funds
2,7%
DM equities
14,8%
REITs
20,1%
Portfolio
3,4%
EMD
22,3%
EMD
12,7%
Cmdty
15,1%
DM equities
8,1%
HY bonds
1,5%
REITs
30,4%
DM equities
6,9%
Cmdty
36,8%
Hedge funds
3,6%
Cmdty
0,4%
REITs
13,5%
Cmdty
15,6%
HY bonds
3,3%
DM equities
20,1%
DM equities
11,0%
EM equities
14,9%
Portfolio
1,7%
IG bonds
1,3%
EM equities
21,1%
Portfolio
1,6%
DM equities
31,6%
Cash
-0,2%
Cash
-0,1%
Portfolio
8,2%
EM equities
10,9%
Hedge funds
2,1%
IG bonds
17,5%
Govt bonds
7,7%
EMD
13,4%
Cash
-0,3%
REITs
0,7%
Portfolio
18,9%
IG bonds
1,3%
Portfolio
16,6%
Govt bonds
-7,3%
IG bonds
-2,9%
HY bonds
7,9%
DM equities
10,4%
Cash
0,2%
Portfolio
16,3%
IG bonds
7,4%
REITs
12,6%
EMD
-3,2%
EMD
0,6%
EMD
17,2%
Govt bonds
0,5%
Hedge funds
11,5%
Portfolio
-7,5%
Govt bonds
-3,3%
EM equities
7,3%
EMD
10,0%
REITs
-1,3%
HY bonds
13,8%
Hedge funds
7,3%
DM equities
11,4%
HY bonds
-3,2%
Cash
-0,3%
HY bonds
15,8%
Cash
-0,3%
HY bonds
9,1%
IG bonds
-8,1%
EM equities
-5,6%
EMD
6,7%
HY bonds
7,5%
IG bonds
-4,0%
Hedge funds
13,2%
HY bonds
6,7%
Portfolio
10,3%
REITs
-4,0%
Portfolio
-1,6%
IG bonds
13,6%
HY bonds
-0,9%
EMD
5,7%
HY bonds
-9,4%
Portfolio
-5,6%
IG bonds
5,2%
Portfolio
6,8%
EM equities
-6,5%
Govt bonds
13,0%
Portfolio
6,3%
IG bonds
7,4%
IG bonds
-4,2%
Hedge funds
-2,0%
Hedge funds
10,6%
Hedge funds
-2,0%
EM equities
5,2%
EM equities
-10,2%
HY bonds
-5,7%
Hedge funds
3,9%
IG bonds
6,7%
Govt bonds
-8,4%
EM equities
11,8%
Cash
0,1%
Hedge funds
5,6%
Govt bonds
-5,8%
DM equities
-3,6%
Cmdty
9,7%
EMD
-3,4%
IG bonds
4,5%
REITs
-12,2%
EMD
-5,7%
Govt bonds
2,3%
Hedge funds
6,3%
EMD
-9,3%
Cash
0,3%
EM equities
-4,9%
Govt bonds
4,7%
Hedge funds
-6,9%
Cmdty
-6,8%
Govt bonds
7,5%
Cmdty
-11,1%
Govt bonds
0,5%
DM equities
-13,3%
REITs
-9,4%
Cash
-0,0%
Govt bonds
6,1%
Cmdty
-13,4%
Cmdty
-5,5%
Cmdty
-16,1%
Cash
-0,2%
Cmdty
-10,7%
EM equities
-9,9%
Cash
-0,3%
REITs
-13,6%
Cash
-0,5%
EMD
-13,3%
DM equities
-10,7%
Cmdty
-1,6%
Cash
0,5%
Source: Bloomberg Barclays, FTSE, J.P. Morgan Economic Research, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Annualised return and
volatility covers the period from 2012 to 2021. Vol. is the standard deviation of annual returns. Govt bonds: Bloomberg Barclays Global Aggregate Government
Treasuries; HY bonds: ICE BofA Global High Yield; EMD: J.P. Morgan EMBI Global Diversified; IG bonds: Bloomberg Barclays Global Aggregate – Corporates;
Cmdty: Bloomberg Commodity; REITs: FTSE NAREIT All REITS; DM equities: MSCI World; EM equities: MSCI EM; Hedge funds: HFRI Global Hedge Fund
Index; Cash: JP Morgan Cash Index EUR (3M). Hypothetical portfolio (for illustrative purposes only and should not be taken as a recommendation): 30% DM
equities; 10% EM equities; 15% IG bonds; 12,5% government bonds; 7,5% HY bonds; 5% EMD; 5% commodities; 5% cash; 5% REITs and 5% hedge funds. All
returns are total return, in EUR, and are unhedged. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe.
Data as of 30 June 2022.
Vol.
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Prepared by: Karen Ward, Tilmann Galler, Vincent Juvyns, Maria Paola Toschi, Michael Bell,
Hugh Gimber, Ambrose Crofton and Max McKechnie.
Unless otherwise stated, all data as of 30 June 2022 or most recently available.
Guide to the Markets - Europe
JP-LITTLEBOOK
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