JPMorgan Turns Bullish on Stocks, Gets the Catalyst Wrong
Andrew Tyler's desk went bullish on US equities Monday on bets that bond yields are "finding a level" and oil is turning lower. The 30-year Treasury hit 5.58%, its highest since 2004, and front-month Brent rose more than 3% to above $107 the same day. The bull case survives, but only for chips, the Magnificent Seven and banks.
Andrew Tyler flipped JPMorgan's trading desk from tactically neutral to bullish on US equities Monday morning, and the day's moves challenged his stated trigger. His note to clients, reported by Bloomberg, argues stocks can run into Friday's payrolls report because bond yields are "finding a level" and oil prices are "likely to trend lower, albeit in a choppy fashion." Yields rose and oil jumped instead. The 30-year Treasury yield touched 5.58%, a fraction below its May 2004 peak of 5.591% and the highest print in two decades. Front-month Brent rose more than 3% to about $107.70 by midday after President Trump rejected Iran's weekend offer to reopen the Strait of Hormuz, and WTI pushed above $95. Tyler's earnings case is sound. The timing mechanism needs a narrower reading than the headline his note generated.
The note is more careful than its framing suggests. Tyler's team is broadening its technology exposure into semiconductors, still likes owning the Magnificent Seven, and outside of AI favors bank stocks on what it calls a growth reboot and a potentially steeper yield curve. It no longer pairs its tech longs with a short on the Russell 2000, citing squeeze risk "from a move lower in oil / yields." The semiconductor leg was tested within hours: the Philadelphia Semiconductor Index fell more than 3% at its low on Monday and was still down 2.5% at midday, with AMD off nearly 5% and Micron almost 4%, as OpenAI's second training pause in three months hit AI hardware. The proposed bull market therefore runs through semiconductors, the largest technology names and banks with capital-markets tailwinds. Small caps and cyclicals still lack the broad participation that would confirm a wider rally.
Tyler's record gives the call weight. He turned cautious in early June, just before a multiweek selloff. He turned cautious again in late August, after Fed Chair Kevin Warsh delivered a hawkish Jackson Hole speech that pushed traders to price in rate hikes rather than cuts. Both calls were right. The conditions he now cites for going long, stable yields and easing crude, were still missing on Monday morning.
The Treasury curve shows the problem. The two-year yield has been rising faster than the ten-year, a bear flattening driven by hike expectations. Tyler's own note says a bull steepening is required "to see a persistent rally in cyclicals." Gold fell more than 3% to a seven-week low the same morning, alongside a firmer dollar and rising real yields, signaling that the market was pricing a more hawkish Fed. The S&P 500 was down 0.8% at midday and the Nasdaq 1%, while the two-year yield rose to 4.94%, leaving it just 32 basis points below the ten-year. Yields were still moving rather than settling.
Oil is the more direct problem for the thesis because Tyler names it explicitly. Brent's jump followed Trump's weekend decision to reject Tehran's proposal on Hormuz, with the White House signaling more talks this week and no resolution yet. The front-month contract has also been trading at a steep premium to December Brent, a backwardation that signals near-term scarcity rather than a supply glut. A desk betting on oil trending lower is taking a position against a geopolitical variable it cannot model and against a futures curve that points higher in the near term.
Earnings justify the bullish flip, and that case does not need yields or oil to cooperate. Corporate profit growth has stayed strong enough, and the AI capital-expenditure cycle broad enough, that a narrow set of companies can outrun a rising discount rate on earnings momentum alone. JPMorgan Private Bank's Kriti Gupta made a version of this point the same day, noting equities have stayed unusually resilient with the ten-year above 5% because growth and earnings keep beating expectations. That is a real bull case, concentrated in companies whose earnings growth can plausibly outpace a 5.5% long bond. It does not support the same confidence across the broader index.
Tyler has the tape on his side. The S&P 500 has gone 41 sessions without a 1% decline through Friday, the longest stretch since October 2025, and the last significant drop came on a Fed day in late July. Bulls will say that resilience under a 5%-plus ten-year yield shows earnings dominate rates in this cycle and breadth is healthy. That view describes a market that has not yet absorbed the repricing seen in gold, silver and the miners on Monday, when silver fell nearly 5% and names like Sibanye Stillwater and Harmony dropped more than 7% in premarket trading. Equities have stayed calm partly because the rate-hike repricing has landed in commodities and precious metals first. October is historically the market's most volatile month, and it is arriving with yields at multi-decade highs and a Fed chair who has already leaned hawkish once.
Friday's payrolls report, with consensus at roughly 90,000 jobs after August's surprise 162,000, is a limited catalyst. A single monthly print gets revised, rarely settles a Fed reaction function on its own, and says little about whether oil-driven inflation is leaking into core prices. The October 14 CPI report will answer that question directly. The October 28 Fed decision, run by a chair who already surprised markets hawkish once this cycle, will show whether the committee treats a stabilizing labor market and rising energy costs as reasons to hold the line on hikes. Those two dates carry more information than a jobs number the market has already discounted to a wide range of outcomes.
If the curve keeps bear-flattening and Brent holds above $100 through mid-October, the broad rally implied by Tyler's note will struggle. Money chasing the headline could then move into small caps and cyclicals that need the steeper curve his note says has yet to appear. By the October 28 Fed meeting, the test is simple: if Warsh's committee validates the hike pricing already built into the bond market, the narrow AI-and-banks trade is the version of this bull call that survives; if yields settle, Tyler will have been early rather than wrong.