Grace Peters from JPMorgan Chase reaffirms her preference for stocks despite escalating bond yields and inflation fears, citing a strengthening earnings supercycle and the importance of valuation discipline.
Grace Peters of JPMorgan Chase is still leaning towards equities even as higher bond yields force investors to demand more from company profits. Speaking on Bloomberg Television, Peters said she sees a market environment shaped by stronger growth data, heavier government and corporate debt supply linked to artificial intelligence spending, and renewed inflation anxiety as oil prices climb above $100 a barrel. In her view, those pressures do not end the case for stocks; instead, they make earnings quality and valuation discipline more important.
Peters argued that fixed income still has a role in portfolios, but only with careful selection. She said her firm’s conviction remains with equities as the main source of portfolio growth, pointing to what she described as a broadening earnings supercycle. That message comes at a time when investors are reassessing how long high borrowing costs can coexist with equity gains.
Markets have already absorbed part of the recent move in rates, Peters said, noting that the 10-year Treasury yield has risen by about 40 basis points over the course of the month. The comment comes against a backdrop of a sharp bond sell-off, with the long end of the U.S. Treasury market climbing to its highest level in more than two decades. Separate reporting by LiveMint and ICM said the 10-year yield reached 5.041% on September 16, the highest since July 2007, as crude prices, inflation worries and expectations of tighter Federal Reserve policy pushed borrowing costs higher.
That rise in yields has not been confined to the U.S. Reuters-style market reports noted that European yields have also been moving up, while U.S. stocks slipped on September 23 after benchmark Treasury yields hit their highest since 2007 and business activity data showed fresh strength in new orders. Peters said she expects earnings forecasts, which she described as already elevated, to be met and potentially increased looking towards 2027. Her preferred companies are those with pricing power and clear visibility on future profits, a stance that reflects the challenge posed by more expensive capital and a tougher hurdle for growth.
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