Higher bond yields should not be disruptive for equities, but rather support a Growth to Value rotation, according to the Quantitative & Derivatives Strategy team led by Marko Kolanovic at J.P.Morgan.
Near term, Kolanovic recommends buying the dip on US indices given oversold conditions in these markets. In the medium-term and on a regional basis, he favours emerging markets, China and Europe because of improving activity and easing headwinds. He also says small and mid-caps are attractive based on valuation and technicals, although he expects 2022 to be front-loaded.
See J.P.Morgan’s equities forecasts for December 2022.