Oil-driven bond yield surge finally bites equities but JP Morgan says do not chase the sell-off

Oil-driven bond yield surge finally bites equities but JP Morgan says do not chase the sell-off

Mon, September 14, 2026 at 3:29 PM GMT+3 1 min read

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JP Morgan has urged investors not to join the recent equity sell-off, arguing that the wobble triggered by rising oil prices and bond yields should prove short-lived.

The bank's strategists said last week's push in Brent crude above $100 a barrel, and the accompanying rise in bond yields, finally dented a market that had been remarkably resilient.

They accepted that oil's near-term direction would dictate risk appetite, with neither the United States nor Iran showing a clear pain threshold.

That could bring more near-term weakness, the bank said, but it does not expect the volatility to last, and reckons third-quarter results due from October will reassure the market.

On bonds, it noted equities had absorbed rising yields well for most of the year, with the MSCI World index up 11% even as yields climbed 80 basis points.

That positive link can hold, the bank said, though the margin narrows as the US 10-year yield nears 5% to 5.5%, where the relationship risks flipping.

The strategists said measured Federal Reserve rate rises, against a backdrop of robust earnings, should let equities weather higher yields.

They suggested a rate rise this week might reassure markets more than a pause, and said the backdrop favoured cyclical and value shares over growth.