JPMorgan predicts that the US-China tensions will not cause a significant change in supply chain problems.
- The G7 is working on banning exports to China and restricting foreign direct investment into China.
- The EU and Japan are not fully on board with the US’s initiative.
- The US’s influence on other economies may not align with what the rest of the world wants.
- China rhetoric may increase as the US election in 2024 approaches.
- Supply chains may become more resilient, leading to potential reshoring of production to the US.
- The risk of a US debt default is becoming more evident.
- The debt ceiling has been in place for over a hundred years and is usually extended.
- If the debt ceiling is breached, there may be added volatility to the market and a risk-off move.
- Yields may fall, and the dollar may also fall.