The stagflation script was rejected. Corporate earnings are still holding up—this narrative pivot is a bit too quick, so I’ll flag it first.

JPMorgan strategists believe that the market is pricing in too much risk of potential interest rate hikes by central banks, creating conditions for a rebound in low-volatility stocks such as consumer staples and utilities. Although the Iran conflict may push energy prices higher, the macro environment is different from 2022; over the next 6–12 months, bond yields and oil prices may decline, corporate earnings prospects remain strong, and stagflation is not the most likely scenario in the second half of the year.