• J.P. Morgan (JPM)'s Bob Michele notes inflation is declining but remains above central bank targets, with new tariff-related pressures complicating the outlook.
  • The bond market shows no signs of panic, as inflation expectations stay anchored despite temporary U.S. price spikes expected from tariffs.
  • J.P. Morgan forecasts global core inflation to move lower in many regions by late 2025, with the Federal Reserve likely holding rates steady until December.

J.P. Morgan Asset Management (JPM)'s Bob Michele, chief investment officer and head of global fixed income, currency and commodities, has indicated that inflation is coming down a bit, though it persists above the Federal Reserve's 2% target and faces complications from recent tariff measures. In recent television commentary, Michele described inflation as being on a "pretty good path" with clear disinflation, but emphasized that prices have not yet reached desired levels. He framed current concerns around whether the U.S. is experiencing new incremental inflation from tariffs or a resurgence of earlier inflationary pressures, noting that the bond market is not signaling alarm.

According to people familiar with the matter, J.P. Morgan's latest Global Fixed Income Views for the fourth quarter of 2025 state that inflation in developed markets is running around 3%, likely to stay above 2% targets through mid-2026, but is expected to be contained and not entrenched in expectations. J.P. Morgan Global Research (JPM) similarly projects global core inflation to stay elevated but move broadly lower in many regions, such as the euro area and Sweden, in the second half of 2025. However, U.S. core inflation is forecast to tick up temporarily due to tariffs before easing again, with an estimated average effective U.S. tariff rate of 13–15% adding modestly to price pressures.

Michele, who remains a key public voice for the firm on bonds and inflation, argued that Corporate America has absorbed much of the tariff shock in margins, moderating pass-through to consumer prices. "We're gliding into year-end in a pretty good environment," he said, pointing to moderate growth and manageable inflation. This view aligns with J.P. Morgan's research, which assigns a higher probability to sub-trend growth—about 65%—and a lower probability of outright recession at around 15%, supporting a relatively calm stance on market volatility.

Efforts to navigate this inflationary landscape have hit a snag as tariff-related pressures introduce uncertainty, but without a sustained shock, the firm expects the 10-year U.S. Treasury yield to settle in the 3.75%–4.5% range. J.P. Morgan anticipates the Federal Reserve will wait until around December for the next rate cut, followed by several cuts in early 2026, given the mix of slowing growth and still-elevated inflation. In the meantime, the fixed income team broadly supports a Fed pause while tariff and other policy impacts become clearer, a strategy echoed by other major asset managers facing similar sticky inflation narratives.

Households and workers continue to feel the pinch from high price levels, though J.P. Morgan expects no wage-price spiral as a softer labor market limits large wage gains. Some moderation in inflation offers limited relief but not a return to pre-pandemic dynamics. For investors, Michele's message supports a higher-for-longer but peaking rate environment, influencing portfolio positioning toward quality fixed income and selective risk assets. As of recent market data, equities have shown resilience amid these forecasts, with J.P. Morgan remaining constructive on growth.

In a related development, JPMorgan Chase (JPM) CEO Jamie Dimon recently described the U.S. economy as strong overall but highlighted inflation as a key weak spot, pointing to still-elevated price increases. Attempts to reach out to Michele for further comment were unsuccessful, but his remarks reflect ongoing macro communication from the firm, not a restructuring event. Looking ahead, J.P. Morgan projects developed-market inflation to stay near 3% into mid-2026, gradually easing as growth slows and services inflation moderates, with many regions in Western Europe falling below or near 2–3% inflation in the latter half of 2025.