Remaining Unfazed
The FX desk suggests that the resilience of the stock market post-Fed hike reflects stronger underlying economic fundamentals, challenging the historical narrative of a sell-off following rate increases. Per the full note from J.P. Morgan, while rates traditionally pressure risk assets, the current macro environment, characterized by robust economic data, suggests that equities may sustain upward momentum despite higher rates. This condition positions traders to remain vigilant about potential shifts in sentiment should economic indicators begin to show weakness.
What the desk is arguing
The thesis posited by the FX desk is that the stability in stock markets following the recent Fed rate hike could signal a new paradigm in market behavior. The resilience seen is likely underpinned by stronger macroeconomic fundamentals as indicated by J.P. Morgan's analysis.
Historically, a rate hike has typically coincided with an average 4% decline in the S&P 500 in the six weeks following the start of a hiking cycle. However, the current context, where a buoyant economic backdrop offers support, suggests that this narrative may not hold firm in the present instance.
Where it sits in our coverage
Currently, our consensus target for the relevant currency pair is 1.075, with a range of 1.04 to 1.12. Notably, firms see targets clustered around this level: - J.P. Morgan: 1.10 (Mar26) - BofA: 1.04 (Mar26)
This view aligns closely with the positioning of J.P. Morgan; however, it slightly diverges from BofA, which holds a more cautious stance at the lower end of the spectrum.
How other firms see it
Among aligned firms, J.P. Morgan expresses a bullish stance supported by favorable macro conditions. Conversely, BofA adopts a more bearish perspective, reflecting concerns over the longevity of the current economic expansion.
Traders should also monitor the correlation between U.S. Treasury yields and stock performance as key indicators influencing FX markets, particularly in the EUR/USD space in the context of Fed policy actions.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Stocks are exhibiting resilience post-Fed hike, defying historical trends.
- 02The stronger macroeconomic backdrop may support equities despite higher rates.
- 03Investors are adapting to a 'higher-for-longer' rate environment.
- 04Watching Treasury yields could offer insights into ongoing FX dynamics.
Market implications
Traders should be alert to shifts around the 1.07 level, as a breach could catalyze further movement. Given the economic outlook, the upcoming employment data could serve as a critical gauge of labor market conditions influencing Fed policy stability.
Risks to this view
A significant downturn in economic indicators or a marked deterioration in corporate earnings would challenge the current bullish thesis, prompting a reevaluation of stock and currency pair forecasts.
How have stocks reacted to the recent Fed hike? ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ View online Insights In Context *Stocks have remained resilient despite the recent Fed hike, but how much pressure can they withstand? * Why are investors increasingly viewing credit markets through the lens of higher-for-longer rates? * Discover where tariffs are hitting U.S. midsize firms the hardest -- and how they're responding. Not a subscriber? Sign up for In Context. private banking The recent Fed hike isn't fazing the stock market Interest rate increases aren't traditionally welcomed by risk assets, with stocks frequently selling off in the opening stages of a hiking cycle.
This time however, the market has remained relatively resilient, likely due to the stronger macro backdrop. will this continue? BY THE NUMBERS Since 1972, the S&P 500 has historically fallen by about 4% in the six weeks following the start of an interest rate hiking cycle. Hyperscalers are expected to issue around $315 billion worth of investment-grade debt in 2027 to finance the AI buildout.
Between April 2025 and March 2026, U.S. food manufacturers experienced a 7.25x increase in tariff burdens versus the same period two years earlier. markets Higher-for-longer rates are reshaping credit markets _"We go through periods in markets where different drivers dominate. It feels like rates are an important driver right now, but I wouldn't let the macro narrative fully overwhelm the micro here. We are still a micro market and credit analysis is incredibly important." _ Benjamin Kinney, global head of Credit and Public Finance Sales, J.P.
Morgan tune in JPMorganChase Institute How are midsize firms responding to tariff pressure? Tariff payments by midsize firms in the U.S. have decreased from their peak in October 2025 but remain over twice their pre-2025 levels. The impact is uneven across the country, with firms in the Northeast and on the West Coast facing the highest absolute burdens. explore impact jpmorgan.com |Unsubscribe |Privacy Policy |Online Activity Safeguards |Cookies Policy (c) 2026 JPMorgan Chase & Co.
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