Insights 
VT 
J.P. Morgan Asset Management is maintaining its current asset allocation strategy after the recent Federal Reserve meeting. The firm prefers international equity diversification and multi-source income strategies, incorporating corporate credit, Asian fixed income, and option overlays to manage volatility.
Alternative assets like infrastructure and transport are also considered reliable income sources. The Federal Reserve has lowered growth projections and raised inflation forecasts, affected by tariffs and Trump-era policies. Despite these changes, J.P. Morgan Asset Management views the U.S. economy as fundamentally strong.
Market Volatility Expectations
However, they caution that market volatility is expected to rise in the latter half of the year.
What the article lays out, firstly, is a reaffirmation of a balanced yet flexible stance in response to recent central bank updates. The Federal Reserve made some adjustments that caught attention: downward revisions to growth expectations paired with an uptick in inflation forecasts. These changes seem, at least in part, buoyed by persistent tariff effects and residual elements of earlier policy decisions. Yet the broader message remains steady—the underlying condition of the U.S. economy isn’t indicating any critical stress.
Despite tighter financial conditions and a slightly more hawkish tilt in projections, the long-running support pillars—employment strength, resilient consumption, and service sector activity—remain supportive. This shouldn’t prompt panic, but instead, careful recalibration.
Preference for Non Domestic Equities
The preference for non-domestic equities underlines a view that there are pockets of more attractive valuations outside the U.S. market, which has had an extended bull run. We interpret this as a selective shift rather than an overarching retreat. There are likely specific markets in Asia and Europe catching Sharps’ attention, partially helped by currency tailwinds and robust company earnings in certain sectors. Still, correlations remain unpredictable, which suggests the need for an expanded data lens before adding any exposure.
Short-duration credit and Asian fixed income allocations are giving us hints—there’s a clear lean towards cushion-building. This, paired with structured risk control strategies like option overlays, points to a potential uptick in implied and realised volatility on the horizon. We should expect fatter tails.
It matters that they are not chasing yield blindly. Spreads may widen if volatility bites, which opens the door to new entry points—for those ready with capital. The idea is to layer risk gradually rather than taking broad directional views.
Alternative income sources, namely infrastructure and transport, are presented almost like ballast during turbulence. These sectors offer somewhat predictable cash flows—not immune to shocks, but less prone to the quick rotations that plague equity-heavy portfolios when data surprises hit. Here, Jenkins seems to be suggesting that stability can be leased, not bought outright.
Looking ahead, the expectation for increased swings in pricing seems reasonably grounded. We’re no longer in an ultra-low volatility regime, and that should influence the size of trades. Calibration matters. Sensitivity to economic data prints—especially on inflation and wage growth—may make event-linked volatility strategies more attractive.
To put it another way: now is not the time for blanket optimism, nor is it an invitation to retreat fully into cash. It’s about arranging a more layered structure, with attention turned towards income durability and tactical hedges. We are no longer in a place where beta alone can carry the load.
So if movement accelerates, execution timing will need to improve. Conviction must come from multi-angle validation—from underlying economic strength, relative value across markets, and demonstrable resilience when stress creeps in. The clues are there, for those who bother to watch with both eyes open.
