A survey released by JPMorgan on Friday showed that the market widely believes the risk of stagflation in the US economy over the next year is much higher than the risk of a recession, with cash being the most favored asset class for 2025.
JPMorgan stated that the survey was conducted from April 1 to 24, with a total of 495 investors participating.
The survey revealed that most respondents believe the trade war initiated by the Trump administration is the most negative policy impacting the US.
60% of respondents think US economic growth will stagnate, and inflation will remain above the US Fed's 2% target. Among them, about 20% expect the inflation rate to exceed 3.5%.
Meanwhile, the market widely anticipates a weakening US dollar, with most respondents predicting the euro-to-US dollar exchange rate will reach 1.11 or higher by year-end, implying an 8% depreciation of the US dollar this year.
JPMorgan noted, "It is noteworthy that US investors and global investors hold significantly different views on the economic impact and market reactions following the US government transition."
As the 10-year US Treasury yield is not expected to drop significantly from current levels, cash is likely to remain highly valued. Over half of the respondents believe the 10-year US Treasury yield will reach or exceed 4.25% by the end of 2025.
Nearly half of the respondents expect Brent crude futures to stay around $66 per barrel, while 30% predict the price will drop to $60 per barrel or lower.
13% of respondents bet on emerging market equities outperforming other asset classes, while only 9% favor developed market equities.
Notably, 57% of respondents expect US stocks to be the asset class with the most capital outflows this year.
ESG (Environmental, Social, and Governance) investing is not favored, with 30% of respondents stating they will stick to their original strategies, but 42% expressing no further interest in the field.