Guide to the Markets · 58. US bull and bear markets 59. US equity market drawdowns and recoveries...

Guide to the MarketsUK | |

MARKET INSIGHTS

Q4 2020 As of 30 September 2020

2

Global Market Insights Strategy Team

Vincent JuvynsLuxembourg

Tilmann Galler, CFAFrankfurt

Maria Paola ToschiMilan

Shogo MaekawaTokyo

Lucia Gutierrez MelladoMadrid

Tai HuiHong Kong

Marcella ChowHong Kong

Ian HuiHong Kong

Kerry Craig, CFAMelbourne

Dr. Jasslyn Yeo, CFASingapore

Karen WardLondon

Ambrose Crofton, CFALondon

Chaoping Zhu, CFAShanghai

Jai Malhi, CFALondon

Manuel Arroyo Ozores, CFAMadrid

Agnes LinTaipei

Michael Bell, CFALondon

Hugh Gimber, CFALondon

Max McKechnieLondon

John ManleyNew York

Samantha AzzarelloNew York

Dr. David Kelly, CFANew York

Dr. Cecelia MundtNew York

Meera Pandit, CFANew York

Gabriela SantosNew York

David LebovitzNew York

Jordan JacksonNew York

Jennie Li, CFANew York

3

Page reference

� Global economy

4. Global growth5. Global Purchasing Managers’ Index (PMI) for manufacturing6. Global inflation7. Global core inflation and inflation expectations8. Global fiscal policy9. Global monetary policy10. Global currencies11. Global trade12. Productivity and population growth13. Global Covid-19 cases and deaths14. Global travel and navigation app usage15. US GDP16. US Economic Monitor17. US business surveys18. US business investment19. US consumer20. US labour market21. US non-farm payrolls and initial jobless claims22. US Conference Board indicators23. US household and corporate finances24. US inflation25. US Federal Reserve policy rate26. US politics: Election polls and corporate tax rates27. US focus: Labour market and government benefits28. Eurozone GDP29. Eurozone business investment30. Eurozone consumer31. Eurozone labour market32. Eurozone inflation33. European Central Bank policy rate34. Eurozone debt35. Eurozone government debt and bond spreads36. Eurozone focus: EU recovery fund and government support for jobs37. UK GDP38. UK consumer39. UK labour market40. UK inflation41. UK Bank of England policy rate42. UK focus: Furlough scheme and trade43. Japan GDP44. China GDP45. China debt46. China inflation and policy rates47. Emerging market currencies and current account48. Emerging market structural dynamics49. Emerging market focus: China GDP, money supply and imports

� Equities

50. Global earnings expectations and equity valuations51. Global income52. Global equity sector weights53. Equity net issuance and dividend payout ratios54. US earnings55. US equity valuations56. US valuations and subsequent returns57. Equity market factors58. US bull and bear markets59. US equity market drawdowns and recoveries60. Europe ex-UK earnings61. Europe ex-UK equity valuations62. UK earnings63. UK equity valuations64. UK large, mid and small capitalisation equities65. European stocks and currencies66. Japan earnings67. Japan equity market and currency68. Emerging market equity drivers69. Emerging market equity valuations and subsequent returns70. Equity focus: Earnings and stock market dispersion71. World stock market returns

� Fixed income

72. Fixed income yields73. Global government bond yields74. US investment-grade bonds75. US high yield bonds76. Europe and UK investment-grade bonds77. Europe high yield bonds78. Emerging market bonds79. Fixed income focus: Yield compression80. Global fixed income spreads and returns

� Other assets

81. Oil82. Metals83. Alternative sources of diversification84. Alternative investments: Real assets85. Sustainable investment strategies86. Sustainable investment performance and market size87. Green bond issuance88. Asset return expectations89. Hedging considerations

� Investing principles

90. Life expectancy91. The effect of compounding92. Cash investments93. Long-term asset returns94. Annual returns and intra-year declines95. Asset class risk-return trade-off96. S&P 500 and fund flows97. US asset returns by holding period98. Asset class returns (GBP)

4

GTM – UK |

-24

-21

-18

-15

-12

-9

-6

-3

0

3

6

'06 '08 '10 '12 '14 '16 '18 '20 '22

Global growth

Real GDP growth Contribution to global real GDP growth% change year on year % change year on year

Source: (Left) BEA, Bloomberg, Eurostat, Japan Cabinet Office, ONS, Refinitiv Datastream, J.P. Morgan Asset Management. Forecasts are from Bloombergcontributor composite. (Right) OECD, Refinitiv Datastream, World Bank, J.P. Morgan Asset Management. EM is emerging markets. DM is developed markets. Dotted line represents forecasts from Bloomberg contributor composite. Past performance and forecasts are not reliable indicators of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

4

Global economy

China

EM ex-China

DM ex-US

US

GlobalQ4 ’20 Q4 ’21

-3.8% 2.6%

-3.9% 3.8%

-5.4% 3.7%

-6.7% 3.8%UK

Japan

Eurozone

US

Consensus forecasts:

-4

-3

-2

-1

0

1

2

3

4

5

6

'85 '88 '91 '94 '97 '00 '03 '06 '09 '12 '15 '18 '21

Forecast

5

51.8 52.3

51.2 52.2

52.5 52.8

51.7 53.7

49.8 51.2

52.2 56.4

53.1 53.2

49.9 50.8

49.4 50.0

52.3 50.0

53.8 55.3

51.8 53.1

55.2 54.1

53.1 53.2

47.2 47.7

53.1 53.0

50.8 47.2

48.5 49.8

52.2 55.2

52.0 56.8

64.7 64.9

41.3 42.1

51.1 48.9

2011 2012 2014 20162008 2009 2010'20

2013 20192015 2017 2018 '20

Global Purchasing Managers’ Index (PMI) for manufacturing

Source: Markit, J.P. Morgan Asset Management. The Global Purchasing Managers’ Index (PMI) for manufacturing assesses the economic health of the sector by surveying manufacturing businesses regarding output, new orders, stocks of purchases, supplier delivery times and employment. A score of 50 indicates that economic activity is neither expanding nor contracting, above 50 indicates expansion. The colours range from red to yellow to green, where red is below 50, yellow is at 50 and green is above 50. Quarterly averages are shown, except the two most recent monthly data points. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

GTM – UK |

Global economy

5

India

Indonesia

Greece

Germany

China

US

UK

Eurozone

France

Italy

Spain

Ireland

Japan

Korea

Global

Developed

Emerging

Taiwan

MexicoBrazil

Russia

SwitzerlandSweden

Eur

ozon

eD

evel

oped

Em

ergi

ng

Aug Sep

6

2.7 2.8 2.4 2.1 1.9 1.9 2.2 2.4 2.3 2.1 2.1 2.0 1.9 2.0 2.4 2.7 2.9 2.8 2.2 1.4 1.1 1.4 1.6 1.5

2.1 2.3 1.9 1.6 1.4 1.4 1.6 1.8 1.5 1.5 1.4 1.3 1.3 1.2 1.5 1.7 1.8 1.7 1.1 0.3 0.1 0.5 0.7 0.6

3.5 3.5 3.1 2.9 2.7 2.6 3.1 3.3 3.4 3.2 3.2 3.1 3.0 3.3 3.8 4.2 4.7 4.4 3.9 3.2 2.6 2.8 2.9 3.0

2.1 2.3 1.9 1.5 1.4 1.5 1.4 1.7 1.2 1.3 1.0 1.0 0.8 0.7 1.0 1.3 1.4 1.2 0.7 0.3 0.1 0.3 0.4 -0.2

2.5 2.5 2.2 1.9 1.4 1.6 1.3 1.5 1.1 1.4 1.3 1.3 1.1 0.9 1.2 1.6 1.7 1.6 0.8 0.4 0.4 0.2 0.9 0.2

1.9 2.3 2.1 1.6 1.4 1.5 1.3 2.0 1.4 1.6 1.7 1.4 1.2 1.1 1.1 1.5 1.7 1.7 1.4 0.9 0.6 0.9 -0.1 0.0

1.5 1.7 1.6 1.2 0.9 1.1 1.1 1.1 0.9 0.8 0.3 0.5 0.2 0.2 0.2 0.5 0.4 0.2 0.1 0.1 -0.3 -0.4 0.8 -0.5

2.3 2.3 1.7 1.2 1.0 1.1 1.3 1.6 0.9 0.6 0.6 0.4 0.2 0.2 0.5 0.8 1.1 0.9 0.1 -0.7 -0.9 -0.3 -0.7 -0.6

1.1 1.8 1.1 0.6 0.5 0.8 1.0 1.1 0.6 0.2 0.4 0.1 0.2 -0.3 0.5 1.1 1.1 0.4 0.2 -0.9 -0.7 -1.9 -2.1 -2.3

1.2 1.1 0.8 0.8 0.8 0.7 1.1 1.7 1.0 1.1 0.5 0.6 0.6 0.6 0.8 1.1 1.1 0.9 0.5 -0.3 -0.8 -0.6 -0.6 -1.1

2.5 2.4 2.1 2.2 2.0 1.9 1.8 2.1 2.1 1.6 1.5 1.3 1.3 1.6 1.8 1.7 1.5 1.3 0.8 -0.2 0.1 0.9 0.7 1.0

1.1 1.1 1.0 0.8 0.7 0.7 0.7 1.1 0.5 0.7 0.4 0.5 0.1 -0.3 -0.3 -0.1 0.2 -0.2 -0.4 -1.0 -1.0 -1.3 -1.2 -1.4

2.4 2.4 2.3 2.1 1.8 1.9 1.9 2.1 2.0 2.0 2.1 1.7 1.7 1.5 1.5 1.3 1.8 1.7 1.5 0.8 0.5 0.6 1.0 0.2

2.3 2.5 2.2 1.9 1.6 1.5 1.9 2.0 1.8 1.6 1.8 1.7 1.7 1.8 2.1 2.3 2.5 2.3 1.5 0.3 0.1 0.6 1.0 1.3

1.2 1.4 0.8 0.3 0.2 0.2 0.5 0.9 0.7 0.7 0.5 0.3 0.2 0.2 0.5 0.8 0.7 0.4 0.4 0.1 0.1 0.1 0.3 0.2

2.5 2.5 2.2 1.9 1.7 1.5 2.3 2.5 2.7 2.7 2.8 2.8 3.0 3.8 4.5 4.5 5.4 5.2 4.3 3.3 2.4 2.5 2.7 2.4

3.0 3.3 3.4 3.2 2.8 2.7 2.5 2.8 3.1 2.8 2.8 3.1 3.1 2.9 2.7 2.6 2.7 3.0 3.0 2.7 2.2 2.0 1.5 1.3

2.1 2.0 2.0 1.3 0.8 0.5 0.4 0.6 0.7 0.7 0.6 0.0 -0.4 0.0 0.2 0.7 1.5 1.1 1.0 0.1 -0.3 0.0 0.3 0.7

1.7 1.2 0.3 -0.1 0.2 0.2 0.6 0.7 0.9 0.9 0.4 0.4 0.4 0.4 0.6 1.1 1.9 -0.2 0.0 -1.0 -1.2 -0.8 -0.5 -0.3

3.7 3.4 2.3 2.1 2.0 2.6 2.9 3.0 3.0 3.2 3.1 3.3 4.0 4.6 5.5 7.4 7.6 6.6 5.8 7.2 6.3 6.2 6.7 6.7

4.5 4.6 4.0 3.7 3.8 3.9 4.6 4.9 4.7 3.4 3.2 3.4 2.9 2.5 3.3 4.3 4.2 4.0 3.3 2.4 1.9 2.1 2.3 2.4

5.0 4.9 4.7 4.8 4.4 3.9 4.0 4.4 4.3 4.0 3.8 3.2 3.0 3.0 3.0 2.8 3.2 3.7 3.3 2.2 2.8 3.3 3.6 4.1

3.4 3.5 3.8 4.3 5.0 5.2 5.3 5.2 5.1 4.7 4.6 4.3 4.0 3.8 3.5 3.0 2.4 2.3 2.5 3.1 3.0 3.2 3.4 3.6

Global inflation

Source: Bank of Mexico, DGBAS, ECB, Goskomstat of Russia, IBGE, India Ministry of Statistics & Programme Implementation, Japan Ministry of Internal Affairs & Communication, Korean National Statistical Office, National Bureau of Statistics China, ONS, Refinitiv Datastream, Riksbank, Statistics Indonesia, Swiss National Bank, US Federal Reserve, J.P. Morgan Asset Management. Figures shown are for headline inflation and are % change year on year. Heatmap colours are based on the respective central bank target inflation rates. Blue is below target, white is at target and red is above target. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

GTM – UK | 6

India

Indonesia

Greece

Germany

USUK

EurozoneFrance

ItalySpain

Ireland

JapanChina

Korea

Global

Developed

Emerging

Taiwan

MexicoBrazil

Russia

SwitzerlandSweden

Eur

ozon

eD

evel

oped

Em

ergi

ng

Jun

Apr

Mar

Dec

Jan

Feb

2018

Mar

May

Jun

Jul

Aug

Nov

Sep

Oct

Dec

Jan

2019

Feb

May

Apr

Jul

Aug

Sep

Oct

Nov

2020

7

GTM – UK |

-2

-1

0

1

2

3

4

5

'07 '09 '11 '13 '15 '17 '19

Global core inflation and inflation expectations

Core inflation Market-based inflation expectations% change year on year %, 5y5y inflation swap

Source: (Left) Bank of Japan, BLS, Eurostat, ONS, Refinitiv Datastream, J.P. Morgan Asset Management. CPI is the Consumer Price Index. Core inflation for the US is defined as CPI excluding food and energy. Core inflation for Japan is defined as CPI excluding fresh food and energy. Core inflation for the UK and the eurozone is defined as CPI less energy, food, alcohol and tobacco. Japan core CPI has been adjusted down by 2% from April 2014 to March 2015 to remove the estimated impact of the consumption tax hike over this period. (Right) Bloomberg, J.P. Morgan Asset Management. 5y5y inflation swap represents the market’s expectation of five-year average inflation, starting in five years’ time. Data for Japan starts in March 2007 due to data availability. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

-2

-1

0

1

2

3

4

5

'07 '09 '11 '13 '15 '17 '19

Headline inflation target

Japan

UK

US

Eurozone

7

Global economy

US

Eurozone

Japan

UK

8

GTM – UK |

12.311.3

9.4

6.2

3.5 3.4 2.7

6.55.3

4.13.1

1.9 1.2 0.72.6

24.0

31.5

16.9

34.0

10.6

16.2

5.44.2

0.5

9.7

1.1

4.9

0.50

5

10

15

20

25

30

35

40

US Japan Germany UK Italy Spain France Brazil S. Africa China Korea Russia India Mexico

Global fiscal policy

Global discretionary fiscal stimulus measures in re sponse to Covid-19% of 2020 nominal GDP, based on IMF estimates

Source: IMF Fiscal Monitor, IMF June World Economic Outlook, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

8

Revenue and spending measures Loans, equity injections and guarantees

Developed markets Emerging markets

Global economy

9

GTM – UK |

0

2

4

6

8

10

12

14

16

18

20

22

24

26

-2

0

2

4

6

8

10

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21

Forecast*

Global monetary policy

Central bank balance sheetsUSD trillions

Source: (Left) Bank of England (BoE), Bank of Japan (BoJ), Bloomberg, European Central Bank (ECB), J.P. Morgan Securities Research, UK Debt Management Office, US Federal Reserve (Fed), J.P. Morgan Asset Management. Chart data includes the eurozone, Japan, UK and US. 2020 and 2021 estimates are from J.P. Morgan Asset Management’s Global Fixed Income, Currency and Commodities team. (Right) BoE, BoJ, ECB, Fed, Refinitiv Datastream, J.P. Morgan Asset Management. Global central bank balance sheet is the sum of the balance sheets of the BoE, BoJ, ECB and Fed. *Balance sheet forecast assumptions: BoE to have net asset purchases totalling GBP 125 bn over the forecast period; BoJ to have net asset purchases totaling JPY 100 tn over the forecast period; ECB to have net asset purchases totalling EUR 1.1 tn over the forecast period; Fed to have net asset purchases of USD 120 bn per month. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

9

Global central bank balance sheet

12-month change in balance sheet

Major central bank purchases and government bond is suanceUSD trillions

Net government bond issuance

Central bank government bond QE purchases

Net government bond supply

-4

-3

-2

-1

0

1

2

3

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21

10

GTM – UK |

-40 -30 -20 -10 0 10 20

Turkey

Brazil

Mexico

South Africa

Japan

Norway

UK

Russia

Sweden

Australia

Canada

South Korea

Eurozone

US

Switzerland

India

China

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

90

95

100

105

110

115

120

125

130

135

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Global currencies

USD real effective exchange rate and interest rate differential Global real effective exchange rate valuationsIndex level (LHS); % (RHS) % premium / discount relative to its average since 1999

Source: (All charts) J.P. Morgan Securities Research, Refinitiv Datastream, J.P. Morgan Asset Management. DM is developed markets and the yield is calculated as a GDP-weighted average of the 10-year government bond yields of Australia, Canada, France, Germany, Italy, Japan, Switzerland and the UK. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

10

US minus DM 10-year government bond yield

USD broad real effective exchange rate

Developed markets

Emerging markets

11

GTM – UK |

0 5 10 15 20 25 30 35 40 45

Global trade

Exports of goods Global export volumes% of nominal GDP, 2019 % change year on year, three-month moving average

Source: (Left) IMF Direction of Trade, IMF World Economic Outlook, J.P. Morgan Asset Management. (Right) CPB Netherlands, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

11

China

EM ex-China

US

Eurozone

Other

Brazil

US

Eurozone

Canada

India

China

Russia

Mexico

Japan

Korea

UK

Emerging markets

Developed markets

-25

-20

-15

-10

-5

0

5

10

15

20

25

'01 '03 '05 '07 '09 '11 '13 '15 '17 '19

12

GTM – UK |

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

'58 - '67 '68 - '77 '78 - '87 '88 - '97 '98 - '07 '08 - '19

Productivity and population growth

Drivers of US GDP growth Global working-age population growthAnnualised % change Annualised % change

Source: (Left) BEA, BLS, J.P. Morgan Asset Management. GDP drivers are calculated as the average annualised growth between Q4 from the preceding year in the period and Q4 of the last year of the period. (Right) United Nations (UN) Department of Economic and Social Affairs, J.P. Morgan Asset Management. Working-age population is defined as aged 15-69. Data from 2020 onwards are UN forecasts. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

2000-2020 2020-20401980-2000

Growth in workers + Growth in real output per worker

Growth in real GDP

12

1.6%

2.2%

1.9%

1.4%

1.1%

2.8% 1.0% 1.3% 1.6% 1.9% 1.0%

4.5%

3.2% 3.2%3.0% 3.0%

1.7%

0.7%

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

US UK Eurozone Japan

13

GTM – UK |

0

20

40

60

80

100

120

140

160

180

200

Feb '20 Apr '20 Jun '20 Aug '20 Oct '200

1

2

3

4

5

6

7

8

9

Feb '20 Apr '20 Jun '20 Aug '20 Oct '20

Global Covid-19 cases and deaths

Daily increase in Covid-19 cases Daily increase in C ovid-19 deathsSeven-day moving average, per million people Seven-day moving average, per million people

Source: (All charts) Johns Hopkins CSSE, J.P. Morgan Asset Management. Cases include both laboratory confirmed and “presumptive positive” cases. Europe includes countries in the EU27 plus Switzerland and the UK. LATAM includes Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela. North America includes Canada and the US. North Asia includes China, Hong Kong, Japan, South Korea and Taiwan. South Asia includes Bangladesh, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, Sri Lanka, Thailand and Vietnam. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

13

North Asia

North America

Europe

South Asia

LATAM

Global economy

North Asia

North America

Europe

South Asia

LATAM

14

GTM – UK |Global travel and navigation app usage

Travel and navigation app usage Travel and navigatio n app usage% change year on year % change year on year

Source: (All charts) App Annie, J.P. Morgan Asset Management. Data is sourced from App Annie with over 600 travel and navigation apps globally, including Google Maps, Uber, Airbnb and Booking.com. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

-100

-80

-60

-40

-20

0

20

40

Jan '20 Mar '20 May '20 Jul '20 Sep '20-100

-80

-60

-40

-20

0

20

40

Jan '20 Mar '20 May '20 Jul '20 Sep '20

14

Russia

South Korea

China

India

South Africa

Brazil

Spain

US

Germany

Italy

UK

France

Global economy

15

GTM – UK |

20

25

30

35

40

45

50

55

60

65

-12

-10

-8

-6

-4

-2

0

2

4

6

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

US GDP

Contribution to US real GDP growth and ISM composit e% change year on year (LHS); index level (RHS)

Source: BEA, Bloomberg, ISM, Refinitiv Datastream, J.P. Morgan Asset Management. The Institute for Supply Management (ISM) composite is an economy-weighted average of the manufacturing and non-manufacturing surveys. A score of 50 indicates that economic activity is neither expanding nor contracting, above 50 indicates expansion. ISM data is shown with quarterly frequency. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Change in inventories

Net exports

Investment

Consumption

Government

ISM composite (RHS)

Global economy

Average since 2000

Q220

2.0% -9.0%

15

16

GTM – UK |

0

10

20

30

40

50

60

70

80

90

100

ConferenceBoard Leading

Economic Index

ConferenceBoard Leading

Credit Index

Consumerconfidence:

Presentsituation

ISM non-manufacturing

ISMmanufacturing:

New orders

Non-farmpayrolls

US Economic Monitor

US economic indicatorsPercentile rank relative to historic data since 1990

Source: BLS, Conference Board, ISM, Refinitiv Datastream, J.P. Morgan Asset Management. Elevated recession risk flags are shown when the underlying indicator is at a level consistent with the onset of any of the three recessions prior to the Covid-19 recession. Transformations used for each of the indicators are: % change year on year for the Leading Economic Index and consumer confidence present situation, index level for Leading Credit Index, ISM non-manufacturing and ISM manufacturing new orders and three-month moving average of monthly absolute change for non-farm payrolls. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

Broad indicators

Latest

Higher recession risk

Consumer and services Manufacturing Labour marketElevated

recession risk

Lower recession risk

Key:

16

17

GTM – UK |

25

30

35

40

45

50

55

60

65

70

75

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Elevated recession risk

US business surveys

US ISM manufacturing: New orders US ISM non-manufact uringIndex level Index level

Source: (All charts) ISM, Refinitiv Datastream, J.P. Morgan Asset Management. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle dates. Elevated recession risk line is shown as the highest value of the underlying indicator observed at the start of the three recessions prior to the Covid-19 recession. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

Recession

17


35

40

45

50

55

60

65

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

18

GTM – UK |US business investment

US future capex intentions and business investment% change year on year (LHS); index level (RHS)

Source: BEA, Dallas Fed, Kansas City Fed, New York Fed, Philadelphia Fed, Refinitiv Datastream, Richmond Fed, J.P. Morgan Asset Management. Future capex intentions is an average index level of the five aforementioned Fed districts equally weighted, displayed using a three-month moving average. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

18

Business investment Future capex intentions

-20

-10

0

10

20

30

40

-20

-15

-10

-5

0

5

10

15

20

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

19

GTM – UK |

-100

-75

-50

-25

0

25

50

75

100

125

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US consumer

US consumer confidence: Present situation US house prices relative to income% change year on year Index level

Source: (Left) Conference Board, Refinitiv Datastream, J.P. Morgan Asset Management. (Right) OECD, Refinitiv Datastream, J.P. Morgan Asset Management. The recent fall in house prices relative to income was primarily driven by a sharp increase in incomes via government benefits during the Covid-19 recession. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle dates. Elevated recession risk line is shown as the highest value of the underlying indicator observed at the start of the three recessions prior to the Covid-19 recession. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

Recession

19

80

90

100

110

120

130

140

'79 '84 '89 '94 '99 '04 '09 '14 '19


20

GTM – UK |

0

2

4

6

8

10

12

14

16

'67 '72 '77 '82 '87 '92 '97 '02 '07 '12 '17

US labour market

US unemployment rate and wage growth%, wage growth is year on year

Source: BLS, Refinitiv Datastream, J.P. Morgan Asset Management. Wage growth is average hourly earnings of total private production and non-supervisory employees. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

Unemployment

Wage growth

20

Sep 2020: 7.9%

Sep 2020:4.6%

21

GTM – UK |

-1,200

-1,000

-800

-600

-400

-200

0

200

400

600

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20200

300

400

500

600

700

800

900

1,000

1,100

1,200

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US non-farm payrolls and initial jobless claims

US non-farm payrolls US initial jobless claimsMonthly change in thousands, three-month moving average Thousands, 12-week moving average

Source: (All charts) BLS, Refinitiv Datastream, J.P. Morgan Asset Management. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle dates. Elevated recession risk line is shown as the highest value of the underlying indicator observed at the start of the three recessions prior to the Covid-19 recession. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

21

Recession


-7,300

Sep 2020: 1,304

3,400

Sep 2020: 1,066

3,200

22

GTM – UK |

-15

-10

-5

0

5

10

15

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20-4

-2

0

2

4

6

8

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Recession

US Conference Board indicators

US Leading Economic Index US Leading Credit Index% change year on year

Source: (All charts) Conference Board, Refinitiv Datastream, J.P. Morgan Asset Management. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle dates. Elevated recession risk line is shown as the highest value for the Leading Economic Index and lowest for the Leading Credit Index at the start of the three recessions prior to the Covid-19 recession. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.


Index level


Lending conditions tightening

Global economy

22

23

GTM – UK |

-6

-4

-2

0

2

4

6

50

55

60

65

70

75

80

'90 '94 '98 '02 '06 '10 '14 '180

5

10

15

20

25

50

60

70

80

90

100

110

'90 '94 '98 '02 '06 '10 '14 '18

US household debt and net saving US non-financial co rporate debt and net saving% of nominal GDP % of nominal GDP

Source: (All charts) BEA, Refinitiv Datastream, US Federal Reserve, J.P. Morgan Asset Management. Household net saving is defined as net disposable income minus final consumption expenditure. Non-financial corporate net saving is defined as the difference between gross savings (less net capital transfers paid and excluding foreign earnings retained abroad) and capital expenditures. Non-financial corporate net saving data has been smoothed in 2018 to account for the Tax Cuts and Jobs Act of 2017. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle dates. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Recession

US household and corporate finances

Non-financial corporate debt

Non-financial corporate net

saving

Householddebt

Household net saving

Global economy

23

24

GTM – UK |

-3

-2

-1

0

1

2

3

4

5

6

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20-2

-1

0

1

2

3

4

5

6

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Average since 2000

August2020

Headline CPI 2.1% 1.3%

Core CPI 2.0% 1.7%

US inflation

US headline and core inflation US core goods and ser vices inflation% change year on year % change year on year

Source: (All charts) BLS, Refinitiv Datastream, J.P. Morgan Asset Management. CPI is the Consumer Price Index. Core CPI is defined as CPI excluding food and energy. Core goods CPI is defined as goods CPI excluding food and energy. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

Average since 2000

August2020

Services CPI 2.7% 2.0%

Core goods CPI 0.0% 0.4%


24

25

GTM – UK |

0

1

2

3

4

5

6

7

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23

US Federal Reserve policy rate

Federal funds policy rate expectations% Fed funds rate and market expectations

Source: Bloomberg, US Federal Reserve, J.P. Morgan Asset Management. Market expectations are calculated using OIS forwards. MBS: Mortgage-backed securities, CMBS: Commercial mortgage-backed securities. The list of policy actions is not exhaustive. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

25

Federal funds rate

Market expectations on 30 September 2020 (mean)

Other Federal Reserve policy actions in 2020

Adopted average inflation targeting framework

Restarted asset purchase programme• Purchases of Treasuries and agency MBS are now unlimited• Expanded the programme to include agency CMBS

Launched a Primary (PMCCF) and Secondary Corporate Credit Facility (SMCCF)

Enhanced US dollar liquidity swap arrangements with a wide range of central banks

New Paycheck Protection Program Liquidity Facility (PPPLF) and Main Street Lending Program to support funding to small businesses

26

GTM – UK |

0

10

20

30

40

50

60

'09 '19 '29 '39 '49 '59 '69 '79 '89 '99 '09 '19-2

0

2

4

6

8

10

12

14

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

US politics: Election polls and corporate tax rates

US election national polls, 2016 vs. 2020 US corpora te tax rates% point, spread of Democrat candidate over Republican candidate %, maximum corporate tax rate

Source: (Left) Bloomberg, RealClearPolitics.com, J.P. Morgan Asset Management. The lines show the spread of national polls between Hillary Clinton and Donald Trump in 2016, and Joe Biden and Donald Trump in 2020, based on the RealClearPolitics average. (Right) IRS, joebiden.com, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

1909

Trump tax cuts

Biden tax hike proposals

Biden 2020

Clinton 2016

Democrat lead

Global economy

26

27

GTM – UK |US focus: Labour market and government benefits

Source: (Left) BLS, Refinitiv Datastream, J.P. Morgan Asset Management. (Right) BEA, Refinitiv Datastream, J.P. Morgan Asset Management. Government benefits not shown include Social Security, Medicaid, Medicare, Veterans Benefits and other transfers, which are all broadly non-cyclical. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Temporary layoffs

Permanent layoffs

Global economy

27

US unemploymentMillions of people

US government benefits% of average total personal income in 2019

Stimulus cheques

Unemployment insurance - $600 per week boost

Unemployment insurance

0

2

4

6

8

10

12

14

16

18

20

'67 '71 '75 '79 '83 '87 '91 '95 '99 '03 '07 '11 '15 '190

2

4

6

8

10

12

14

16

18

Feb '20 Mar '20 Apr '20 May '20 Jun '20 Jul '20 Aug '20

28

GTM – UK |

10

15

20

25

30

35

40

45

50

55

60

65

-16

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Eurozone GDP

Contribution to eurozone real GDP growth and composit e PMI% change year on year (LHS); index level (RHS)

Source: Eurostat, Markit, Refinitiv Datastream, J.P. Morgan Asset Management. PMI is Purchasing Managers’ Index where a score of 50 indicates that economic activity is neither expanding nor contracting, above 50 indicates expansion. PMI data is shown with quarterly frequency. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

Average since 2000

Q220

1.1% -14.7%

28


Net exports

Investment

Consumption

Government

Composite PMI (RHS)

29

GTM – UK |

-50

-40

-30

-20

-10

0

10

20

-20

-15

-10

-5

0

5

10

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21

Eurozone business investment

Eurozone business investment and investment confiden ce% change year on year (LHS); index level (RHS)

Source: Eurostat, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

Business investment

29

Investment goods industry confidence

30

GTM – UK |

-25

-20

-15

-10

-5

0

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Eurozone consumer

Eurozone consumer confidence Eurozone retail sales vol umesIndex level Real index level, rebased to 100 at Jan 2010

Source: (Left) European Commission, Refinitiv Datastream, J.P. Morgan Asset Management. Light grey columns indicate recession in the eurozone. (Right) Eurostat, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

30

Recession

0

50

100

150

200

250

300

350

'10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Total retail sales

Internet or mail orders

Clothing, textiles and footwear

31

GTM – UK |

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

4

5

6

7

8

9

10

11

12

13

14

'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21

Eurozone labour market

Eurozone unemployment rate and wage growth%, wage growth is year on year

Source: ECB, Refinitiv Datastream, J.P. Morgan Asset Management. Wage growth is compensation per employee. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

31

Aug 2020:8.1%

Q220:-4.6%

Wage growthUnemployment

-5.0

32

GTM – UK |

-1

0

1

2

3

4

5

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Eurozone inflation

Eurozone headline and core inflation Eurozone core goo ds and services inflation% change year on year % change year on year

Source: (All charts) Eurostat, Refinitiv Datastream, J.P. Morgan Asset Management. CPI is the Consumer Price Index. Core CPI is defined as CPI less energy, food, alcohol and tobacco. Core goods CPI is defined as goods CPI less energy, food, alcohol and tobacco. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Average since 2000

September 2020(flash)

Services CPI 1.9% 0.5%

Core goods CPI 0.6% -0.3%

Global economy

32


Average since 2000

September 2020(flash)

Headline CPI 1.7% -0.3%

Core CPI 1.3% 0.2%

33

GTM – UK |

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23

European Central Bank policy rate

European Central Bank policy rate expectations% deposit rate and market expectations

Source: Bloomberg, European Central Bank, J.P. Morgan Asset Management. Market expectations are calculated using OIS forwards. The list of policy actions is not exhaustive. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

ECB deposit rate


33

European Central Bank policy actions in 2020

Launched the Pandemic Emergency Purchase Programme (PEPP)• Up to €1.35trn of purchases, which will run until at least June 2021• Increased flexibility on issuer and maturity limits• Short-term deviations from the capital key permitted • Greek bonds are eligible for purchase

Expanded existing Asset Purchase Programme (APP) by €120bn for 2020

Expanded eligibility of non-financial commercial paper for the Corporate Sector Purchase Programme (CSPP)

Enhanced multiple forms of Longer-Term Refinancing Operations to backstop liquidity

Bonds downgraded to junk since 7 April made eligible collateral for ECB lending

34

GTM – UK |

40

50

60

70

80

90

100

110

120

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Eurozone debt

Eurozone debt to GDP ratios Eurozone debt service ratios% of nominal GDP % of disposable income

Source: (All charts) Bank for International Settlements, Refinitiv Datastream, J.P. Morgan Asset Management. Debt refers to gross debt. Debt service ratios are a GDP-weighted average of France, Germany, Italy and Spain. For the household sector, gross disposable income is the amount of money that all of the individuals in the household sector have available for spending or saving after income distribution measures (for example, taxes, social contributions and benefits) have taken effect. For the non-financial corporate sector, gross disposable income is essentially akin to gross operating surplus before dividends or interest are paid. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Households

Non-financial corporates

Government

Global economy

Non-financial corporatesHouseholds

34

32

33

34

35

36

37

38

39

40

5.0

5.5

6.0

6.5

7.0

7.5

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

35

GTM – UK |

0

20

40

60

80

100

120

140

160

180

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '200

1

2

3

4

5

6

7

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Eurozone government debt and bond spreads

France, Germany, Italy and Spain government debt to GDP European 10-year government bond spreads over G ermany% of nominal GDP % spread

Source: (Left) Bank for International Settlements, Refinitiv Datastream, J.P. Morgan Asset Management. Italy and France data are four-quarter moving averages. Debt refers to gross debt. Dotted lines represent the IMF forecasts for government debt to GDP in 2020. (Right) Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Germany

Spain

France

Italy

Global economy

Spain

France

Italy

35

Forecast

36

GTM – UK |Eurozone focus: EU recovery fund and government support for jobs

Beneficiaries and contributors of EU recovery fund proposal* Proportion of jobs receiving government supportEUR billions, labels are % of GDP % of total employment

Source: (Left) European Commission, J.P. Morgan Asset Management. Countries shown are the top eight net beneficiaries / contributors. *Current expectations of the European Commission’s proposal. Yet to be accepted and ratified by EU member parliaments. (Right) Bundesagentur für Arbeit, INE, INSEE, Istat, ONS, RefinitivDatastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

36

Global economy Net beneficiaries

Net contributors

0

2

4

6

8

10

12

UK Germany Italy France Spain

3%

2%

4% 9%5% 5%

12%10%

-2% -1% -2% -2% -2%-2%

-1%

-2%-80

-60

-40

-20

0

20

40

60

37

GTM – UK |

0

5

10

15

20

25

30

35

40

45

50

55

60

65

-26

-24

-22

-20

-18

-16

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

8

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

UK GDP

Contribution to UK real GDP growth and composite PM I% change year on year (LHS); index level (RHS)

Source: Markit, ONS, Refinitiv Datastream, J.P. Morgan Asset Management. PMI is Purchasing Managers’ Index where a score of 50 indicates that economic activity is neither expanding nor contracting, above 50 indicates expansion. PMI data is shown with quarterly frequency. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Average since 2000

Q220

1.5% -21.5%

37

Global economy


Net exports

Investment

Consumption

Government

Composite PMI (RHS)

38

GTM – UK |

-40

-30

-20

-10

0

10

20

'87 '92 '97 '02 '07 '12 '17

UK consumer

UK consumer confidence UK house prices relative to incomeIndex level, three-month moving average Index level

Source: (Left) GfK, Refinitiv Datastream, J.P. Morgan Asset Management. (Right) OECD, Refinitiv Datastream, J.P. Morgan Asset Management. Light grey columns indicate recession. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Recession

38

Global economy

40

50

60

70

80

90

100

110

120

130

'87 '92 '97 '02 '07 '12 '17

39

GTM – UK |

-5

0

5

10

15

20

0

2

4

6

8

10

12

'85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21

UK labour market

UK unemployment rate and wage growth%, wage growth is year on year

Source: ONS, Refinitiv Datastream, J.P. Morgan Asset Management. Wage growth is a three-month moving average of average weekly earnings for the whole economy, including bonuses and arrears. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

39

Wage growth

Unemployment

Jul 2020:4.1%

Jul 2020:-1.0%

40

GTM – UK |

-6

-4

-2

0

2

4

6

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20-1

0

1

2

3

4

5

6

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

UK inflation

UK headline and core inflation UK core goods and ser vices inflation% change year on year % change year on year

Source: (All charts) ONS, Refinitiv Datastream, J.P. Morgan Asset Management. CPI is the Consumer Price Index. Core CPI is defined as CPI less energy, food, alcohol and tobacco. Core goods CPI is defined as goods CPI less energy, food, alcohol and tobacco. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Average since 2000

August2020

Headline CPI 2.0% 0.2%Core CPI 1.7% 0.9%

Average since 2000

August 2020

Services CPI 3.3% 0.6%Core goods CPI -0.6% 1.2%

40

Global economy


41

GTM – UK |

-1

0

1

2

3

4

5

6

7

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23

UK Bank of England policy rate

Bank of England policy rate expectations% base rate and market expectations

Source: Bank of England (BoE), Bloomberg, J.P. Morgan Asset Management. Market expectations are calculated using OIS forwards. SMEs: Small and medium-sized enterprises. The list of policy actions is not exhaustive. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

BoE base rate


41

Other Bank of England policy actions in 2020

Restarted asset purchase programme, with £300bn of purchases to be made by year-end

Launched a Covid Corporate Financing Facility (CCFF) to purchase commercial paper

Launched a Term Funding Scheme for SMEs (TFSME)

Cut the countercyclical capital buffer from 1% to 0%

Temporary direct financing of government spending needs, reviving the “Ways and Means Facility” that was used in 2008

42

GTM – UK |UK focus: Furlough scheme and trade

UK jobs on furlough UK trade with partners% of total employment % of nominal GDP of exporting country/region, 2019

Source: (Left) ONS Business Impact of Covid-19 Survey, J.P. Morgan Asset Management. (Right) Eurostat, IMF, ONS, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

42

0

5

10

15

20

25

30

35

0

2

4

6

8

10

12

14

16

18

20

UK exportsto EU

UK exports toWorld ex-EU

EU exportsto UK

World ex-EUexports to UK

43

GTM – UK |

22

26

30

34

38

42

46

50

54

58

62

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Japan GDP

Contribution to Japan real GDP growth and manufactu ring PMI% change year on year (LHS); index level (RHS)

Source: Japan Cabinet Office, Markit, Refinitiv Datastream, J.P. Morgan Asset Management. PMI is Purchasing Managers’ Index where a score of 50 indicates that economic activity is neither expanding nor contracting, above 50 indicates expansion. PMI data is shown with quarterly frequency. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Average since 2000

Q220

0.7% -10.1%

43

Global economy


Net exports

Investment

Consumption

Government

Manufacturing PMI (RHS)

44

GTM – UK |

-5

0

5

10

15

20

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20-10

-5

0

5

10

15

20

25

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

China GDP

Contribution to China real GDP growth China industri al production and retail sales% change year on year % change year on year

Source: (Left) Bloomberg, National Bureau of Statistics of China, Refinitiv Datastream, J.P. Morgan Asset Management. GDP forecast is from Bloomberg contributor composite. (Right) National Bureau of Statistics of China, Refinitiv Datastream, J.P. Morgan Asset Management. Industrial production is a three-month moving average and retail sales is a six-month moving average. Past performance and forecasts are not reliable indicators of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Consumption

GDP growth

Investment

Net exports

Global economy

44

Q2 20202020

forecast

3.2% 2.1%

Industrial production

Retail sales

H1 ’20

45

GTM – UK |

0

20

40

60

80

100

120

140

160

180

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

China debt

China debt to GDP ratios China credit growth% of nominal GDP % change year on year

Source: (Left) Bank for International Settlements, Refinitiv Datastream, J.P. Morgan Asset Management. Debt refers to gross debt. (Right) People’s Bank of China (PBoC), J.P. Morgan Asset Management. This chart includes two measures of credit ranging from the narrowest – bank lending – to the more extensive broad credit. Specifically, bank lending is the sum of all loans made by the commercial banking system to domestic borrowers. Broad credit includes all finance provided to non-financial entities in private and public sectors. Broad credit is all funding to domestic borrowers, including bank lending, trust loans, entrusted loans, bankers’ acceptances, corporate bonds, equity financing by non-financial enterprises, asset-backed securities, loan write-offs, central government and local government bonds. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Households

Government

Global economy

Non-financial corporates

45

0

5

10

15

20

25

30

35

40

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Broad credit

RMB bank lending

46

GTM – UK |

-10

-5

0

5

10

15

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

China inflation and policy rates

China inflation China interbank rate and reserve requirement ratio (RRR)% change year on year % rate

Source: (Left) Bloomberg, Refinitiv Datastream, J.P. Morgan Asset Management. CPI is the Consumer Price Index. Core CPI is defined as CPI excluding food and energy. PPI is the Producer Price Index. (Right) People’s Bank of China, Refinitiv Datastream, J.P. Morgan Asset Management. Average RRR for large and small banks. SHIBOR is the three-month interbank rate. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Average since 2007

August2020

Headline CPI 2.8% 2.4%

Core CPI 1.3% 0.5%Headline PPI 0.9% -2.0%

Global economy

46

RRRSHIBOR

5

10

15

20

25

30

0

1

2

3

4

5

6

7

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

47

GTM – UK |

-40

-30

-20

-10

0

10

20

30

'92 '96 '00 '04 '08 '12 '16 '20-2.4

-2.0

-1.6

-1.2

-0.8

-0.4

0.0

0.4

0.8

1.2

1.6

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Emerging market currencies and current account

EM currencies vs. US dollar EM current account balance% from fair value, relative to US dollar % of nominal GDP

Source: (Left) J.P. Morgan Asset Management. Fair value is based on nominal exchange rates relative to PPP exchange rates and is adjusted for GDP per capita. (Right) Bloomberg, J.P. Morgan Asset Management. EM currencies and current account balances are created using the current weighted average of JPM GBI-EM Global Diversified Index countries. Current account balance is the balance of a country’s net trade in goods and services, its net earnings on cross-border investments and its net transfer payments. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

+1 std. dev.

Average

Global economy

47

EM current account balance improving

EM currencies expensive relative to USD

-1 std. dev.

48

GTM – UK |

USA

JPNDEU

GBRFRA

CAN

ITA ESP

AUS

NLD

CHN

IND

BRA

MEX

TUR

KOR

RUS

IDN

ARG

SAU

THA

HKG

ZAF

-10,000

0

10,000

20,000

30,000

40,000

50,000

60,000

0 20 40 60 80 100

0

5

10

15

20

25

30

'70 '75 '80 '85 '90 '95 '00 '05 '10 '15 '20

Emerging market structural dynamics

Urbanisation, real GDP per capita and population si ze Share of global real GDPUrbanisation rates, %, and GDP per capita, USD, bubble size is population %

Source: (Left) World Bank, J.P. Morgan Asset Management. Urbanisation rate refers to the proportion of the total population living within an urban area defined by national statistical offices. Countries are labelled using three-letter International Organisation of Standardisation country codes. (Right) Refinitiv Datastream, World Bank, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

48

US

Eurozone

China

Japan

India

GD

P p

er c

apita

Urbanisation rate

Emerging markets

Developed markets

0

49

GTM – UK |

40

100

160

220

280

340

400

90

100

110

120

130

140

150

'06 '08 '10 '12 '14 '16 '18 '20 '22

Emerging market focus: China GDP, money supply and imports

Source: (Left) BEA, Bloomberg, Eurostat, National Bureau of Statistics of China, ONS, J.P. Morgan Asset Management. Forecasts are from Bloombergcontributor composite. (Right) China Customs, IMF, PBoC, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Global economy

49

-40

-20

0

20

40

60

80

-20

-10

0

10

20

30

40

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21

Real GDP levelsIndex level, rebased to 100 at 1Q 2006

China

Forecast

Eurozone

US

UK

% change year on yearChina M1 money supply and import growth

China import growthM1 money supply growth

50

GTM – UK |

0x

5x

10x

15x

20x

25x

30x

35x

40x

Global earnings expectations and equity valuations

Consensus estimates for global earnings per share g rowth Global forward price-to-earnings ratios % change year on year, earnings per share growth estimates x, multiple

Source: (Left) FTSE, IBES, MSCI, Refinitiv Datastream, Standard & Poor’s, TOPIX, J.P. Morgan Asset Management. MSCI indices are used for Europe ex-UK and EM. UK is FTSE All-Share, US is S&P 500 and Japan is TOPIX. Data used are in local currency, except for EM, which is in US dollars. Year on year growth rates are calculated based on earnings estimates for the end of the calendar year. For Japan the end of the year is the fiscal year, which ends on 31 March of the following year. (Right) IBES, MSCI, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. MSCI indices are used for all regions/countries (due to data availability), except for the US, which is represented by the S&P 500. 23 March 2020 marks the recent trough of the S&P 500. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

50

Equities

US UKEuropeex-UK

Japan EMUS UKEuropeex-UK

Japan EM

20212020 2021 vs. 2019

-60

-40

-20

0

20

40

60

Range since 1990

Average since 1990

Current

23 March 2020

80x77x

51

GTM – UK |

0.1

0.2 1.8 2.0 2.3

4.6 4.8 4.8 5.3 5.7

7.6

10.7

0

2

4

6

8

10

12

UK cash UK Gilts UK IG DM equity EM equity FTSE All-Share

Global REITs EM debt Globalconvertibles

DM high yield Globalinfrastructure

Globaltransport

Global income

Equity index yields% yield

Source: (Top) Bloomberg Barclays, BofA/Merrill Lynch, Clarkson, Drewry Maritime Consultants, FTSE, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Additional yield often comes with associated capital and/or liquidity risk. Global transport yield is as of June 2020 and global infrastructure yield is as of March 2020. Yields for the bond indices are yield to worst and dividend yields for the equity indices. Global transport levered yield is rental income minus operating expenses, debt amortisation and interest expenses, expressed as a percentage of equity value. Global convertibles: Bloomberg Barclays Global Convertibles; DM equity: MSCI World; EM equity: MSCI EM; UK Gilts: UK 10-year yield; UK IG: Bloomberg Barclays Sterling Agg. –Corporates; Global REITs: FTSE NAREIT Index; DM high yield: BofA/Merrill Lynch Developed Markets High Yield Constrained; EM debt: J.P. Morgan EMBI Global; Global infrastructure: MSCI Global Infrastructure Asset Index – Low risk. (Bottom) Bloomberg, FTSE, MSCI, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Buyback yield is last 12 months’ buybacks divided by the market cap of the index. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Equities

51

Average UK inflation: 1.2%(12 months to August 2020)

% yieldAsset yield comparison

Buyback yield

Dividend yield

MSCI WorldFTSE All-Share MSCI Europe ex-UKS&P 500 MSCI EMMSCI Japan0

1

2

3

4

5

6

7

Fixed income

Equity

Alternatives

Convertibles

52

GTM – UK |

0

5

10

15

20

25

30

IT Health Care Cons. Discr. Comm. Serv. Financials Industrials Cons. Staples Utilities Materials Energy

Global equity sector weights

Global equity sector weights

MSCI World Growth and Value sector weights

% of total market cap

% of total market cap

Source: (Top) MSCI, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Indices are all MSCI, except for US, which is S&P 500. (Bottom) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Real estate is not included in these sector breakdowns due to the small size of the weight in each index. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Equities

52

Europe ex-UK EMUS UK

MSCI World Growth MSCI World Value

0

5

10

15

20

25

30

35

40

IT Health Care Cons. Discr. Comm. Serv. Financials Industrials Cons. Staples Utilities Materials Energy

53

GTM – UK |

20

30

40

50

60

70

'06 '08 '10 '12 '14 '16 '18 '20-1,000

-800

-600

-400

-200

0

200

400

'04 '06 '08 '10 '12 '14 '16 '18 '20

Equity net issuance and dividend payout ratios

US and Europe net equity issuance Dividend payout ra tiosUSD billions, 12-month rolling %, three-month moving average

Source: (Left) Bernstein, Bloomberg, J.P. Morgan Asset Management. Net equity issuance is equity issuance minus buybacks. (Right) FTSE, MSCI, Refinitiv Datastream, Standard & Poor's, J.P. Morgan Asset Management. US: S&P 500; Europe ex-UK: MSCI Europe ex-UK; UK: FTSE All-Share; EM: MSCI Emerging Markets. Dividend payout ratio shows 12-month trailing dividend per share divided by 12-month trailing earnings per share. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Equities

53

Europe ex-UK

US

UK

Europe ex-UK

US

UK

EM

54

GTM – UK |US earnings

S&P 500 earnings and performance US nominal GDP grow th and earnings growthNext 12 months’ earnings per share estimates (LHS); index level (RHS) % change year on year

Source: (Left) IBES, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Earnings data is based on 12-month forward estimates. (Right) BEA, IBES, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Earnings data is last 12 months’ earnings per share. Nominal GDP forecasts are from J.P. Morgan Securities Research. Past performance and forecasts are not reliable indicators of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Equities

54

S&P 500 index level

S&P 500 forward EPS

-40

-30

-20

-10

0

10

20

30

40

-10

-8

-6

-4

-2

0

2

4

6

8

10

'86 '90 '94 '98 '02 '06 '10 '14 '18 '22

US nominal GDP

S&P 500 trailing EPS

2020/2021 nominal GDP forecasts

0

400

800

1,200

1,600

2,000

2,400

2,800

3,200

3,600

0

20

40

60

80

100

120

140

160

180

200

'86 '90 '94 '98 '02 '06 '10 '14 '18

55

GTM – UK |

-20 0 20 40 60 80

Health Care

Financials

Cons. Staples

IT

Utilities

Materials

Comm. Serv.

S&P 500

Industrials

Energy

Cons. Discr.

10

12

14

16

18

20

22

24

26

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US equity valuations

S&P 500 forward P/E ratio S&P 500 forward P/E ratio sector breakdownx, multiple % premium / discount of the P/E ratio relative to average since 1995

Source: (Left) FactSet, IBES, Refinitiv Datastream, Robert Shiller, Standard & Poor’s, J.P. Morgan Asset Management. P/E ratio calculated using IBES earnings estimates for next 12 months. P/E data may differ from Guide to the Markets - US, which uses FactSet earnings estimates. Shiller cyclically-adjusted P/E (CAPE) is price-to-earnings ratio adjusted using trailing 10-year average inflation-adjusted earnings. P/B ratio is trailing price-to-book ratio. (Right) IBES, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Average: 16.0x

Valuation measureAverage

since 1990

Latest

Shiller CAPE ratio 25.9x 30.6x

P/B ratio 2.9x 3.6x

Equities

55

30 Sep 2020:21.7x

33.6

33.5

22.6

21.7

21.3

20.3

17.4

24.6

20.1

13.1

15.4

Current P/E ratio

Premium relative to history

56

GTM – UK |

-60

-40

-20

0

20

40

60

8.0x 11.0x 14.0x 17.0x 20.0x 23.0x

US valuations and subsequent returns

S&P 500 forward P/E ratios and subsequent 1-year re turns S&P 500 forward P/E ratios and subsequent 10-y ear returns%, annualised total return* %, annualised total return*

Source: (All charts) IBES, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. *Dots represent monthly data points since 1988, which is earliest available. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Equities

56

Current level

-20

-15

-10

-5

0

5

10

15

20

25

30

8.0x 11.0x 14.0x 17.0x 20.0x 23.0x

Current level

57

GTM – UK |

8

12

16

20

24

28

32

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Equity market factors

S&P 500 Quality/S&P 500 relative performance MSCI Wo rld Growth and Value forward P/E ratioRelative total return index level, rebased to 100 in 1990 x, multiple

Source: (Left) J.P. Morgan Asset Management Quantitative Beta Solutions, Standard and Poor’s, J.P. Morgan Asset Management. S&P 500 Quality index is the top quartile quality stocks in the S&P 500 determined by JPMAM Quantitative Beta Strategies based on measures of profitability, financial risk and earnings quality. Periods of “recession” are defined using US National Bureau of Economic Research (NBER) business cycle dates. (Right) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Forward P/E ratio is the price to 12-months forward ratio, as published by MSCI. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Equities

57

Value

GrowthRecession

90

100

110

120

130

140

150

160

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

58

GTM – UK |

-70

-60

-50

-40

-30

-20

-10

0

'58 '60 '62 '64 '66 '68 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

0

100

200

300

400

500

600

'58 '60 '62 '64 '66 '68 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US bull and bear markets

S&P 500 bull markets, %

S&P 500 bear markets, %

Source: (All charts) Bloomberg, Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. A bear market represents a 20% or more decline from the previous market high using a monthly frequency; a bull market represents a 20% increase from a market trough. Charts and labels refer to price return. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

60 months101%

131 months401%

147 months582%

32 months74%

50 months86%

74 months126%

60 months229%

43 months80% 26 months

48%

17 months-57%

30 months-49%

3 months-34%

20 months-27%

21 months-48%

18 months-36%

8 months-22%6 months

-28%

58

Equities

Duration:19 Feb-23 MarPrice return: -34%

Duration:Since 23 MarPrice return: 50%

59

GTM – UK |

-60

-50

-40

-30

-20

-10

0

0 180 360 540 720 900 1,080 1,260 1,440 1,620 1,800

US equity market drawdowns and recoveries

S&P 500 drawdowns and recoveries% price return since market peak

Source: Refinitiv Datastream, Standard & Poor’s, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

1987 2007 20001980 19731968

Trading days after S&P 500 market peak

59

Equities

2020

60

GTM – UK |

0

200

400

600

800

1,000

1,200

1,400

1,600

0

20

40

60

80

100

120

140

160

'88 '92 '96 '00 '04 '08 '12 '16 '20

Eurozone nominal GDP growth and earnings growth

Europe ex-UK earnings

MSCI Europe ex-UK earnings and performanceNext 12 months’ earnings per share estimates, EUR (LHS); index level (RHS) % change year on year

Source: (Left) IBES, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Earnings data is based on 12-month forward estimates. (Right) Eurostat, IBES, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Earnings data is last 12 months’ earnings per share. Nominal GDP forecasts are from J.P. Morgan Securities Research. MSCI EMU is MSCI European Monetary Union and represents eurozone equities. Past performance and forecasts are not reliable indicators of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Equities

60

MSCI Europe ex-UK index level

MSCI Europe ex-UK forward EPS

-50

-40

-30

-20

-10

0

10

20

30

40

50

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

14

'97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21

Eurozone nominal GDP

MSCI EMU trailing EPS

2020 / 2021 nominal GDP forecasts

61

GTM – UK |

-20 -10 0 10 20 30 40 50 60

Comm. Serv.

Financials

Health Care

Utilities

IT

Energy

Europe ex-UK

Cons. Staples

Industrials

Cons. Discr.

Materials

7

9

11

13

15

17

19

21

23

25

27

'90 '94 '98 '02 '06 '10 '14 '18

Europe ex-UK equity valuations

MSCI Europe ex-UK forward P/E ratio MSCI Europe ex-U K forward P/E ratio sector breakdownx, multiple % premium / discount of the P/E ratio relative to average since 1995

Source: (Left) FactSet, IBES, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. P/E ratio calculated using IBES earnings estimates for next 12 months. Cyclically-adjusted P/E (CAPE) is price-to-earnings ratio adjusted using trailing 10-year average inflation-adjusted earnings. P/B ratio is trailing price-to-book ratio. (Right) IBES, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

30 Sep 2020:17.9x

Average: 14.6x

Valuation measure

Average since 1990

Latest

CAPE ratio 21.2x 18.6x

P/B ratio 2.0x 1.8x

61

Equities

21.6

21.6

21.1

23.1

17.9

15.2

26.2

15.6

17.4

10.1

14.8

Current P/E ratio


62

GTM – UK |

-40

-30

-20

-10

0

10

20

30

40

50

60

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

UK earnings

FTSE All-Share earnings and performance FTSE All-Sha re earnings per share growthNext 12 months’ earnings per share estimates, GBP (LHS); index level (RHS) % change year on year

Source: (All charts) FTSE, IBES, Refinitiv Datastream, J.P. Morgan Asset Management. Earnings data are based on 12-month forward estimates. Margin growth is the growth rate of earnings per share divided by sales per share. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Equities

62

FTSE All-Share index level

FTSE All-Share forward EPS

Margin growth

Sales growth

Earnings growth

1,500

2,000

2,500

3,000

3,500

4,000

4,500

100

150

200

250

300

350

'99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21

63

GTM – UK |

-40 -20 0 20 40 60

Comm. Serv.

Financials

Cons. Staples

Materials

MSCI UK

Energy

Health Care

Utilities

Cons. Discr.

IT

Industrials

7

9

11

13

15

17

19

21

23

25

'99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19

UK equity valuations

UK FTSE All-Share forward P/E ratio UK forward P/E r atio sector breakdownx, multiple % premium / discount of the P/E ratio relative to average since 1995

Source: (Left) FTSE, IBES, Refinitiv Datastream, J.P. Morgan Asset Management. P/E ratio calculated using IBES earnings estimates for next 12 months for the FTSE All-Share. (Right) IBES, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Index used is MSCI UK, due to data availability and index classification. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

30 Sep 2020:14.6x

Average: 14.3x

63

Equities

22.6

32.8

20.7

15.8

17.5

13.5

13.9

11.3

13.6

9.6

11.0

Current P/E ratio


64

GTM – UK |

0

10

20

30

40

50

60

70

'13 '14 '15 '16 '17 '18 '19 '20

UK small & mid cap exposure

0

200

400

600

800

1,000

1,200

'87 '92 '97 '02 '07 '12 '17

UK large, mid and small capitalisation equities

FTSE 100 vs. FTSE 250 performanceIndex level, rebased to 100 in 1987 %

Source: (Left) FactSet, FTSE, Refinitiv Datastream, J.P. Morgan Asset Management. (Right) Bloomberg, Morningstar, J.P. Morgan Asset Management. *Exposure to small & mid cap companies is the exposure of flexible cap UK funds. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Equities

64

Average fund manager exposure*

Weight of small & mid cap in FTSE All-Share

25th - 75th percentile range

FTSE 250

FTSE 100

% of revenues from overseas

FTSE 250 60%

FTSE 100 77%

65

GTM – UK |

1.0

1.2

1.4

1.6

1.8

2.0

2.2

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

European stocks and currencies

Index level (LHS); US dollars per UK pound (RHS)

Source: (Left) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. (Right) FTSE, Refinitiv Datastream, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Equities

65

FTSE All-Share and sterling vs. US dollar

GBPUSD

FTSE All-Share

Sterling depreciating

MSCI Europe ex-UK and euro vs. US dollarIndex level (LHS); US dollars per euro (RHS)

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

400

600

800

1,000

1,200

1,400

1,600

'99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21

EURUSD

MSCI Europe ex-UK

Euro depreciating

66

GTM – UK |

0

500

1,000

1,500

2,000

2,500

3,000

0

20

40

60

80

100

120

140

160

180

'88 '92 '96 '00 '04 '08 '12 '16 '20-80

-60

-40

-20

0

20

40

60

80

100

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Japan earnings

TOPIX earnings and performance TOPIX earnings per sh are growthNext 12 months’ earnings per share estimates, JPY (LHS); index level (RHS)

Source: (All charts) FactSet, IBES, Refinitiv Datastream, TOPIX, J.P. Morgan Asset Management. Earnings data are based on 12-month forward estimates. Margin growth is the growth rate of earnings per share divided by sales per share. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Equities

66

% change year on year

Margin growth

Sales growth

Earnings growth

TOPIX index level

TOPIX forward EPS

67

GTM – UK |Japan equity market and currency

TOPIX and the yen vs. US dollarIndex level (LHS); Japanese yen per US dollar (RHS)

Source: Refinitiv Datastream, TOPIX, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

USDJPY (inverted)

TOPIX

Equities

Yen depreciating

67

70

80

90

100

110

120

130

140400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

68

GTM – UK |Emerging market equity drivers

EM/DM relative equity performance and growth gap EM/ DM relative equity performance and USD REERRelative index level (LHS); %, next 12 months’ growth estimates (RHS) Relative index level (LHS); index level (RHS)

Source: (Left) Consensus Economics, Refinitiv Datastream, J.P. Morgan Asset Management. “EM minus DM GDP growth” is consensus estimates for emerging markets growth in the next 12 months minus consensus estimates for developed markets growth in the next 12 months, provided by Consensus Economics. (Right) J.P. Morgan Securities Research, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. For all charts, EM equity is MSCI Emerging Markets and DM equity is MSCI World. Relative equity performance is calculated from price indices in USD, and is rebased to 100 in 1997. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Equities

68

USD REER (inverted)

EM equity outperformance & USD weakening

EM growth & equity outperformance

EM minus DM GDP growth

EM / DM relative equity performance EM / DM relative equity performance

-1

0

1

2

3

4

5

10

40

70

100

130

160

'97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21

85

95

105

115

125

13520

40

60

80

100

120

140

160

180

'97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21

69

GTM – UK |

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Emerging market equity valuations and subsequent returns

MSCI EM price-to-book ratio MSCI EM price-to-book ratio and subsequent 10-year returnsx, multiple %, annualised total return*

Source: (All charts) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. *Dots represent monthly data points since 1996, which is earliest available. MSCI EM Index returns are in USD. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Equities

69

Average: 1.8x

30 Sep 2020:1.8x

-20

-10

0

10

20

30

0.8x 1.3x 1.8x 2.3x 2.8x 3.3x

Current level

70

GTM – UK |Equity focus: Earnings and stock market dispersion

Equity forward earnings estimates Equity markets yea r-to-dateNext 12 months’ earnings per share, rebased to 100 at the start of the year Total return index level, rebased to 100 at the start of the year

Source: (All charts) FTSE, IBES, MSCI, Refinitiv Datastream, Standard & Poor’s, TOPIX, J.P. Morgan Asset Management. Indices used are; eurozone: MSCI EMU; Japan: TOPIX; UK: FTSE 100; US growth: S&P 500 Growth; US value: S&P 500 Value. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Equities

70

60

70

80

90

100

110

120

130


US growth

Japan

Eurozone

US value

UK

60

70

80

90

100

110

120

130


US growth

Japan

Eurozone

US value

UK

71

1.3% TOPIX -40.6%

59.4% MSCI EM

62.8%

23.7% Asia ex-Jp

15.6%

2.9% S&P 500

2.1%

17.3% Asia ex-Jp

19.7%

29.9% S&P 500 32.4%

20.8% S&P 500 13.7%

18.2% TOPIX 12.1%

33.5% S&P 500 12.0%

29.8% Asia ex-Jp

35.9%

1.6% S&P 500 -4.4%

26.4% S&P 500 31.5%

8.3% Asia ex-Jp

5.6%

5.9% Asia ex-Jp

9.6%

12.9% S&P 500

9.1%

-12.8% S&P 500 -37.0%

53.6% Asia ex-Jp

67.2%

22.9% MSCI EM

14.4%

-3.5% FTSE All-

Share -3.5%

17.2% Euro ex-UK

20.0%

26.3% Euro ex-UK

24.2%

11.7% Asia ex-Jp

7.7%

7.3% S&P 500

1.4%

33.1% MSCI EM

10.1%

25.8% MSCI EM

31.0%

-6.4% Portfolio

-9.3%

21.0% Euro ex-UK

27.5%

8.2% S&P 500

5.6%

4.8% MSCI EM

8.8%

8.2% Portfolio

6.1%

-22.8% Portfolio -38.8%

30.1% FTSE All-

Share 30.1%

19.5% TOPIX 1.0%

-7.7% Portfolio

-7.2%

13.4% MSCI EM

17.4%

24.7% TOPIX 54.4%

7.6% Portfolio

7.5%

5.9% Euro ex-UK

9.1%

26.2% Asia ex-Jp

6.4%

17.0% Portfolio

21.4%

-8.4% TOPIX

-16.0%

19.6% Portfolio

23.2%

1.9% TOPIX -3.4%

4.1% S&P 500

8.9%

7.3% TOPIX 3.5%

-23.9% Euro ex-UK

-42.7%

27.2% Portfolio

35.4%

18.7% S&P 500 15.1%

-11.9% TOPIX

-17.0%

12.4% Portfolio

16.7%

20.8% FTSE All-

Share 20.8%

4.3% MSCI EM

5.6%

2.9% Portfolio

1.8%

25.4% Portfolio

9.8%

16.7% Euro ex-UK

14.5%

-8.8% Asia ex-Jp

-12.0%

19.2% FTSE All-

Share 19.2%

1.5% MSCI EM

2.9%

2.8% TOPIX 5.2%

7.1% Asia ex-Jp

4.4%

-29.9% FTSE All-

Share -29.9%

19.3% Euro ex-UK

29.0%

16.9% Portfolio

12.0%

-13.9% Euro ex-UK

-12.1%

12.3% FTSE All-

Share 12.3%

18.6% Portfolio

23.6%

2.7% TOPIX 10.3%

1.0% FTSE All-

Share 1.0%

23.4% TOPIX 0.3%

15.6% TOPIX 22.2%

-8.9% MSCI EM

-9.7%

14.6% TOPIX 18.1%

-0.8% Euro ex-UK

-7.4%

2.1% Portfolio

4.6%

5.9% FTSE All-

Share 5.9%

-33.9% Asia ex-Jp

-47.7%

12.6% S&P 500 26.5%

14.5% FTSE All-

Share 14.5%

-16.5% Asia ex-Jp

-14.6%

10.9% S&P 500 16.0%

1.4% Asia ex-Jp

6.2%

1.2% FTSE All-

Share 1.2%

-3.6% Asia ex-Jp

-5.3%

19.7% Euro ex-UK

3.2%

13.1% FTSE All-

Share 13.1%

-9.1% Euro ex-UK

-10.6%

14.3% MSCI EM

18.5%

-1.8% Portfolio

-4.0%

1.3% Euro ex-UK

1.8%

5.9% Euro ex-UK

4.0%

-35.2% MSCI EM -45.7%

-6.7% TOPIX 7.6%

5.7% Euro ex-UK

5.1%

-17.6% MSCI EM -12.5%

2.8% TOPIX 20.9%

-4.1% MSCI EM

3.8%

0.0% Euro ex-UK

7.4%

-9.7% MSCI EM

-5.4%

16.8% FTSE All-

Share 16.8%

11.3% S&P 500 21.8%

-9.5% FTSE All-

Share -9.5%

13.9% Asia ex-Jp

18.2%

-19.9% FTSE All-

Share -19.9%

-2.9% FTSE All-

Share -2.9%

5.4% MSCI EM

4.3%

World stock market returns

Source: MSCI, Refinitiv Datastream, Standard & Poor’s, TOPIX, J.P. Morgan Asset Management. Annualised return covers the period 2008 to 2019. Hypothetical portfolio (for illustrative purposes only and should not be taken as a recommendation): 25% FTSE 100; 25% S&P 500; 15% EM; 15% Euro ex-UK; 10% Asia ex-Japan; 10% TOPIX. All indices are total return. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

GTM – UK |

GBP

Local

Equities

71

2010 201620122008 2011 YTD2009 2013 2014 2015 2017 Q3 ’202018Ann.

return since ’08

2019

72

GTM – UK |

-2

0

2

4

6

8

10

Fixed income yields

Fixed income yields%

Source: Bloomberg, Bloomberg Barclays, ICE BofA, J.P. Morgan Economic Research, Refinitiv Datastream, J.P. Morgan Asset Management. Beta to MSCI World is calculated using monthly total returns since 2008. Indices used are as follows: Euro IG: Bloomberg Barclays Euro-Aggregate – Corporate; Global IG: Bloomberg Barclays Global Aggregate – Corporate; UK IG: Bloomberg Barclays Sterling Aggregate – Corporate; US IG: Bloomberg Barclays US Aggregate – Corporate; Euro HY: ICE BofA Euro Developed Markets Non-Financial High Yield Constrained Index; Global HY: ICE BofA Global High Yield Index; US HY: ICE BofA US High Yield Constrained Index; EMD Corporate: CEMBI Broad Diversified; EMD local: GBI-EM Global Diversified: EMD local – China: GBI-EM China: EMD Sovereign: EMBI Global Diversified; EMD Sov. IG: EMBI Global Diversified IG; EMD Sov. HY: EMBI Global Diversified HY. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Fixed income

Developed market government bonds Investment-grade bonds High yield bonds Emerging market bonds

-0.1 0.0 -0.1 -0.2 0.1 0.1 0.2 0.3 0.2 0.2 0.2 0.2 0.4 0.5 0.4 0.5 0.5 0.3 0.0 0.1 0.4 0.4 0.5

Return beta to MSCI World

72

73

GTM – UK |Global government bond yields

Nominal 10-year government bond yields Real 10-year government bond yields% yield % yield

Source: (All charts) Bloomberg, J.P. Morgan Asset Management. Real government bond yields are the difference between nominal bond yields and inflation breakeven yields and so reflect inflation-protected yields. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

73

US

Germany

UK

Fixed income

US

Germany

UK

-1

0

1

2

3

4

5

6

7

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20-3

-2

-1

0

1

2

3

4

5

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

74

GTM – UK |

0

1

2

3

4

5

6

7

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US investment-grade bonds

US investment-grade spread%, option-adjusted spread over US government bond yield

Source: (Left) Bloomberg Barclays, Refinitiv Datastream, J.P. Morgan Asset Management. Index is Bloomberg Barclays US Aggregate – Corporate. (Right) Bloomberg Barclays, J.P. Morgan Asset Management. Index used is Bloomberg Barclays US Agg. Corporate – Investment Grade. Fallen angels are credit names that have been downgraded from investment-grade rating to high yield. Rising stars are credit names that have been upgraded from high yield status to investment grade. YTD is year-to-date. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Fixed income

74

30 Sep 2020:1.4%

US investment-grade fallen angels and rising stars% of the index (par value, average for the year)

Rising stars

Fallen angels

-10

-8

-6

-4

-2

0

2

4

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

YTD

75

GTM – UK |

0

3

6

9

12

15

18

21

24

0

2

4

6

8

10

12

14

16

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '200

3

6

9

12

15

18

21

24

0

2

4

6

8

10

12

14

16

18

20

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US high yield ex-energy spread and defaults

US high yield bonds

%, default rate (LHS); %, option-adjusted spread (RHS)

Source: (All charts) Bloomberg, ICE BofA, J.P. Morgan Securities Research, J.P. Morgan Asset Management. HY spreads are using the ICE BofA US High Yield Energy and ex-Energy, Metals & Mining indices. Default rates are defined as the par value percentage of the total market trading at or below 50% of par value and include any Chapter 11 filing, prepackaged filing or missed interest payments. *2020 default rate is for the last 12 months. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Fixed income

75

Latest

Ex-energy default rate* (LHS) 3.8%

Ex-energy spread (RHS) 4.9%

US high yield energy sector spread and defaults%, default rate (LHS); %, option-adjusted spread (RHS)

Latest

Energy default rate* (LHS) 17.3%

Energy spread (RHS) 8.7%

76

GTM – UK |

0

1

2

3

4

5

6

7

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Europe and UK investment-grade bonds

Euro and UK investment-grade spreads%, option-adjusted spread over local government bond yield

Source: (Left) Bloomberg Barclays, Refinitiv Datastream, J.P. Morgan Asset Management. Indices are Euro inv. grade: Bloomberg Barclays Euro Aggregate –Corporate; UK inv. grade: Bloomberg Barclays Sterling Aggregate – Corporate. (Right) Bloomberg Barclays, J.P. Morgan Asset Management. Index used is Bloomberg Barclays Euro Aggregate – Corporate. Fallen angels are credit names that have been downgraded from investment-grade rating to high yield. Rising stars are credit names that have been upgraded from high yield status to investment grade. YTD is year-to-date. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Euro

UK

Fixed income

76

30 Sep 2020:1.5%

30 Sep 2020:1.2%

Euro investment-grade fallen angels and rising star s% of the index (par value, average for the year)

Rising stars

Fallen angels

-5

-4

-3

-2

-1

0

1

2

'01 '03 '05 '07 '09 '11 '13 '15 '17 '19

YTD

77

GTM – UK |

0

3

6

9

12

15

18

21

24

0

2

4

6

8

10

12

14

16

18

20

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Europe high yield bonds

Euro high yield spread and defaults%, default rate (LHS); %, option-adjusted spread (RHS)

Source: Bloomberg, ICE BofA, Refinitiv Datastream, J.P. Morgan Securities Research, J.P. Morgan Asset Management. Option-adjusted spread shown for ICE BofAEuro Developed Markets Non-Financial High Yield Constrained Index. Defaults are defined as bonds downgraded to C rating. The calculation universe is based on par value percentage of the EUR and GBP HY Non-Financials Corporate bond universe. Defaults include missed coupon payments, restructuring and distressed exchanges. *2020 default rate is for the last 12 months. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

34%

Fixed income

77

40Latest

Default rate* (LHS) 2.3%

Spread (RHS) 4.8%

78

GTM – UK |

2

3

4

5

6

7

8

9

10

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Emerging market bonds

Real 10-year government bond yields% yield, local currency

Source: (Left) Bloomberg, J.P. Morgan Asset Management. Real yield is calculated by using nominal yield less current CPI for the respective countries. (Right) Bloomberg, J.P. Morgan Asset Management. EM sovereigns local currency is the J.P. Morgan GBI-EM Global Diversified; EM sovereigns USD is the J.P. Morgan EMBIG Diversified; EM corporates USD is the J.P. Morgan CEMBI Broad Diversified. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Fixed income

78

Developed markets

Emerging markets

Corporate and sovereign EMD spreads %, spread over 10-year US Treasury

Average since 2008

Latest

EM sovereigns local 4.0% 3.8%

EM sovereigns USD 3.5% 4.5%

EM corporates USD 3.6% 3.9%

-2

-1

0

1

2

3

4

5

6

7

79

GTM – UK |Fixed income focus: Yield compression

Developed and emerging markets average policy rates%

Source: (Left) Bloomberg, J.P. Morgan Asset Management. Policy rates are an average of the policy rates in 19 emerging market countries and 13 developed market countries or regions. (Right) Bloomberg, ICE BofA, J.P. Morgan Asset Management. Index shown is the ICE BofA Global Government Bond index. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

79

Developed market government bond yields% of ICE BofA Global Government Bond Index

Fixed income

Developed market

Emerging market

0

10

20

30

40

50

60

70

80

90

100

'14 '15 '16 '17 '18 '19 '20

% yielding below 1%

% yielding below 0%

0

2

4

6

8

10

12

14

16

18

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

80

GTM – UK |

40.1% US HY 17.5%

10.6% Euro HY

6.3%

7.1% US Treas.

0.9%

11.0% UK IG 11.0%

11.6% US Treas.

8.9%

2.3% Euro HY

2.5%

11.3% US HY 7.6%

31.4% EM Debt 10.2%

4.9% UK IG 4.9%

3.8% US HY -2.3%

10.6% EM Debt 15.0%

9.9% Infl Linked

9.9%

1.5% UK IG 1.5%

10.6% EM Debt

6.9%

27.6% Euro HY 10.2%

2.3% Infl Linked

2.3%

3.6% US IG -2.5%

10.1% US IG 14.5%

9.3% US IG 6.6%

0.1% US HY 4.7%

9.3% US IG 5.7%

26.6% US IG 6.1%

2.0% UK Gilts

2.0%

1.9% Portfolio

-1.5%

10.0% US HY 14.4%

8.2% UK Gilts

8.2%

-1.3% UK Gilts -1.3%

8.4% Portfolio

6.3%

25.2% Infl Linked

25.2%

0.7% EM Debt 10.3%

1.7% EM Debt

-4.3%

7.9% Portfolio

10.6%

6.9% Portfolio

5.2%

-1.6% Portfolio

0.9%

8.3% Euro HY

7.0%

23.1% Portfolio

10.7%

0.2% Portfolio

5.0%

0.5% UK Gilts

0.5%

7.2% UK Gilts

7.2%

4.8% UK IG 4.8%

-2.2% Infl Linked

-2.2%

7.4% Infl Linked

7.4%

20.5% US Treas.

1.0%

-1.8% US HY 7.5%

-0.3% Infl Linked

-0.3%

6.5% Infl Linked

6.5%

3.8% Euro HY -3.0%

-2.2% EM Debt

2.3%

7.0% US Treas.

3.4%

12.3% UK IG 12.3%

-2.8% US IG 6.4%

-2.2% UK IG -2.2%

4.7% Euro HY 10.9%

2.1% US HY -0.4%

-3.0% US IG 1.5%

6.1% UK IG 6.1%

10.7% UK Gilts 10.7%

-6.5% US Treas.

2.3%

-3.0% Euro HY -4.0%

2.7% US Treas.

6.9%

2.0% EM Debt

-0.5%

-4.3% US Treas.

0.2%

5.6% UK Gilts

5.6%

Global fixed income spreads and returns

Fixed income spreads Fixed income returns%, option-adjusted spread

Source: (All charts) Bloomberg, Bloomberg Barclays, ICE BofA, J.P. Morgan Economic Research, Refinitiv Datastream, J.P. Morgan Asset Management. 23 March 2020 marks the recent high in US credit spreads. Euro IG: Bloomberg Barclays Euro Agg. – Corporate; US HY: ICE BofA US High Yield Constrained; EM Debt: J.P. Morgan EMBI Global Diversified; Euro HY: ICE BofA Euro Developed Markets Non-Financial High Yield Constrained; US IG: Bloomberg Barclays US Agg. Corporate – Investment Grade; UK IG: Bloomberg Barclays Sterling Agg.– Corporates; UK Gilts: Bloomberg Barclays Sterling Gilts; US Treasuries: Bloomberg Barclays US Agg. Gov. – Treasury; Infl Linked: ICE BofA UK Gilt Inflation-Linked Government. Hypothetical portfolio (for illustrative purposes only and should not be taken as a recommendation): 20% UK Gilts; 15% US Treasuries; 10% Linkers; 15% US IG; 10% UK IG; 10% US HY; 5% Euro HY; 15% EM Debt. Annualised return covers period 2008 to 2019. Returns are unhedged in sterling and local currencies. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

|

£:

LCL:

Fixed income

80

Range since 2000

Average

Current

US IGEuro IG UK IG US HYEuro HYEMD

(USD Sov.)

20172016 2018 2019 Q3 ’20YTDAnn. return

since ’08

23 March 2020

1.2 1.4 1.5

4.34.8

5.4

2.5

3.72.8

7.2

9.0

10.9

0

2

4

6

8

10

12

14

16

18

20

81

GTM – UK |

0

5

10

15

20

25

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22

Oil

Source: (Left) Baker Hughes, Bloomberg, J.P. Morgan Asset Management. (Right) EIA, Refinitiv Datastream, J.P. Morgan Asset Management. Dotted lines are J.P. Morgan Asset Management estimates based on announced cuts. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Other assets

81

WTI crude oil price and US rig countUSD/barrel (LHS); number of rigs (RHS)

RigsOil price

Crude oil production by countryMillion barrels per day

US

OPEC (ex-Saudi Arabia & Iraq)

Russia

Saudi Arabia

Iraq

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

0

20

40

60

80

100

120

140

160

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21

Forecast

82

GTM – UK |

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

'12 '13 '14 '15 '16 '17 '18 '19 '20

Metals

Gold vs. real US 10-year Treasury yield$ per Troy ounce (LHS); %, inverted (RHS)

Source: (Left) Refinitiv Datastream, J.P. Morgan Asset Management. Real yield is the US 10-year Treasury inflation-protected security yield. (Right) Bloomberg, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Other assets

82

30 Sep 2020

Gold (LHS) $1,900

Real 10-year yield (RHS) -0.9%

Metal pricesIndex level, rebased to 100 in Jan 2007

0

25

50

75

100

125

150

175

200

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Nickel

Copper

Zinc

Aluminium

83

GTM – UK |Alternative sources of diversification

Source: (Left) CBOE, FTSE, Hedge Fund Research Indices (HFRI), Refinitiv Datastream, J.P. Morgan Asset Management. Macro hedge fund (total return in USD) relative performance is calculated relative to the FTSE All-Share (total return in GBP). VIX is the implied volatility of S&P 500 Index based on options pricing.(Right) Hedge Fund Research Indices (HFRI), Refinitiv Datastream, J.P. Morgan Asset Management. 2000 bear market is from 31 March 2000 to 31 October 2002, 2008 bear market is from 31 October 2007 to 28 February 2009, 2020 bear market is from 31 January 2020 to 30 April 2020. Hedge fund strategies are defined in the HFRI hedge fund strategy classification system. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Other assets

83

Hedge fund style returns during bear markets% total return

VIX

Macro hedge fund relative performance to FTSE All-Share

Macro hedge fund relative performance & volatilityIndex level (LHS); % change year on year (RHS)

2000 bear market

2008 bear market

2020 bear market

-40

-30

-20

-10

0

10

20

30

40

50

60

70

0

10

20

30

40

50

60

70

'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

-40

-30

-20

-10

0

10

20

30

84

GTM – UK |Alternative investments: Real assets

Source: (Left) MSCI, J.P. Morgan Asset Management. Infrastructure returns represented by the “low risk” category of the MSCI Global Quarterly Infrastructure Asset Index. Data show rolling one-year returns from income and capital appreciation. The chart shows the full index history, beginning in the first quarter of 2009. (Right) 2020 Long-Term Capital Market Assumptions, J.P. Morgan Multi-Asset Solutions, J.P. Morgan Asset Management. The resulting projections include only the benchmark return associated with the portfolio and do not include alpha from the underlying product strategies within each asset class. Macro hedge fund return expectations are currency hedged. The assumptions are presented for illustrative purposes only. Past performance and forecasts are not reliable indicators of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Other assets

84

Global core infrastructure returns%, rolling 4-quarter returns from income and capital appreciation

Income

Capital appreciation

% annual compound return in GBPExpected returns and volatility in coming 10-15 yea rs

0

1

2

3

4

5

6

7

0 2 4 6 8 10 12 14

100% UK Gilts

100% UK large cap

Com

poun

d re

turn

Volatility

60% UK large cap40% UK Gilts

60% UK large cap10% UK Gilts

10% UK core real estate10% Global infrastructure equity

10% Macro hedge funds

-5

0

5

10

15

20

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

85

Sustainable investment strategies

Source: J.P. Morgan Asset Management. Guide to the Markets - UK. As of 30 September 2020.

GTM – UK | 85

ESG INTEGRATION: Consideration of material ESG information as part of the investment decision-making process

DEDICATED SUSTAINABLE STRATEGIES

EXCLUSIONS POSITIVE TILT BEST-IN-CLASS THEMATIC IMPACT

The exclusion from a fund or portfolio of

certain sectors, companies or practices based on specific ESG

criteria

An investment style in which the portfolio will

be tilted towards sectors, companies or projects with positive ESG characteristics, while also excluding companies based on

ESG criteria

A comparative investment style that

involves investing only in companies that lead

their peer groups in ESG performance, while

also excluding companies based on

ESG criteria

Top-down investment approach, investments

in themes or assets specifically related to

sustainability

Investments made with the primary goal of achieving specific,

positive environmental/social benefits while also

delivering a financial returnO

ther assets

86

GTM – UK |

0

2

4

6

8

10

12

14

16

Sustainable investment performance and market size

Sustainable investment assets under managementUSD trillions

Source: (Left) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. The MSCI World ESG Leaders Index is a capitalisation-weighted index that provides exposure to companies with high Environmental, Social and Governance (ESG) performance relative to their sector peers. The MSCI World Governance-Quality Index aims to reflect the performance of a strategy that is seeking to capture both the financial and corporate governance aspects of Quality investing. (Right) Global Sustainable Investment Alliance (GSIA), J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

17%

114%25%

19%

8%

2016

Compound annual growth rate

2018

Other assets

86

Europe US Japan Canada Australia/New Zealand

MSCI World ESG performanceIndex level in USD, rebased to 100 at Jan 2020

MSCI World

MSCI World Governance-Quality

MSCI World ESG leaders

60

70

80

90

100

110

120


87

GTM – UK |

0

50

100

150

200

250

300

2012 2013 2014 2015 2016 2017 2018 2019

Green bond issuance

Green bond issuance by regionUSD billions

Source: Climate Bonds Initiative, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK.Data as of 30 September 2020.

Other assets

Latin America

Africa

Supranational

North America

Asia Pacific

Europe

87

88

GTM – UK |Asset return expectations

2020 Long-Term Capital Market Assumptions expected returns in coming 10-15 years%, annualised return in GBP

Source: 2020 Long-Term Capital Market Assumptions, J.P. Morgan Multi-Asset Solutions, J.P. Morgan Asset Management. Returns are nominal and in GBP. Past returns are calculated from the start of 2009 up to the end of 2019, or the most recent available data. The projections in the chart above are based on J.P. Morgan Asset Management’s proprietary long-term capital market assumptions (10-15 years) for returns of major asset classes. The resulting projections include only the benchmark return associated with the portfolio and do not include alpha from the underlying product strategies within each asset class. The assumptions are presented for illustrative purposes only. Past performance and forecasts are not reliable indicators of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Other assets

88

Fixed income

Equity

Alternatives

Historical return since 2009

-4

-2

0

2

4

6

8

10

12

14

16

UK govt.inflation-linked

Gilts

UK Gilts UK cash UK investment-grade corporate

bonds

US large cap Globalinfrastructure

UK core realestate

UK large cap Eurozone largecap

EM equity

89

GTM – UK |

-50

-40

-30

-20

-10

0

10

20

30

40

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18

Hedging considerations

Source: (Left) MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. The grey bar shows the GBP unhedged annual return for MSCI World, the blue bar shows the profit or loss that a GBP investor would experience from hedging their equity exposure, and the green square shows the GBP hedged annual return for MSCI World. (Right) Bloomberg, J.P. Morgan Asset Management. A positive number implies that an investor gains a yield pickup when hedging currency risk, and a negative number implies that an investor pays to hedge currency risk, based on 3-month FX forward rates. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Other assets

89

Developed market equity returns in GBP%, annual price return

Rolling hedging costs%, annualised hedging cost based on 3-month FX forwards

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

'16 '17 '18 '19 '20

EUR asset to GBP

USD asset to GBP

Hedging getting more expensive

JPY asset to GBP

Unhedged return

Hedged return

Hedging impact

90

GTM – UK |Life expectancy

Probability of reaching ages 80 and 90% probability, persons aged 65, by gender and combined couple

Source: ONS 2016-2018 Life Tables, J.P. Morgan Asset Management. Past performance is not a reliable indicator of current and future results.Guide to the Markets - UK. Data as of 30 September 2020.

Men

Women

Couple – at least one lives to specified age

Investing

principles

90

67

24

76

35

92

51

0

20

40

60

80

100

80 years 90 years

91

GTM – UK |

0

20,000

40,000

60,000

80,000

100,000

120,000

'86 '90 '94 '98 '02 '06 '10 '14 '180

100,000

200,000

300,000

400,000

500,000

600,000

700,000

25 30 35 40 45 50 55 60 65

The effect of compounding

£5,000 invested annually with 5% growth per year £5, 000 investment with/without income reinvestedGBP GBP, FTSE All-Share returns

Source: (Left) J.P. Morgan Asset Management. For illustrative purposes only, assumes all income reinvested, actual investments may incur higher or lower growth rates and charges. (Right) Bloomberg, FTSE, J.P. Morgan Asset Management. Based on FTSE All-Share Index and assumes no charges. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Investing

principles

Starting at age 35

Starting at age 25

Without dividends reinvested

With dividends reinvested

Age

£354,000

£24,000

£640,000

£86,000

91

92

GTM – UK |

0

2

4

6

0

2,000

4,000

6,000

'01 '03 '05 '07 '09 '11 '13 '15 '17 '19

0

10

20

30

40

50

60

70

80

90

100

0 5 10 15 20 25 30 35 40

Cash investments

Income generated by £100,000 in a three-month bank depositGBP (LHS); % change year on year (RHS)

Source: (Left) Bloomberg, ONS, J.P. Morgan Asset Management. Inflation is the percentage change year on year for UK consumer prices. Data shown are yearly averages. (Right) J.P. Morgan Asset Management. For illustrative purposes only, assumes no return on cash and an inflation rate of 2%. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

2007: £6,000

Investing

principles

92

Income Inflation

GBP, thousandsEffect of 2% inflation on purchasing power of £100, 000

Years

£100,000

£44,5002020: £370

93

GTM – UK |

0

1

10

100

1,000

1900 1920 1940 1960 1980 2000 2020

Long-term asset returns

Total return of £1 in real termsGBP, log scale for total returns

Source: Bloomberg, Bloomberg Barclays, Dimson, FactSet, FTSE, J.P. Morgan, Marsh and Staunton ABN AMRO/LBS Global Investment Returns calculated from the Yearbook 2008, J.P. Morgan Asset Management. Equities: FTSE 100; Bonds: JPMorgan GBP Government Bond Index; Cash: three-month GBP LIBOR (prior to 2008 cash is short-dated Treasury bills). Latest point as of end of 2019. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Annualised real returns

1900–2019 2000–2019

Equities 5.2% 1.6%

Bonds 1.7% 3.7%

Cash 0.7% -0.5%

Equities: £433

Bonds: £7

Cash: £2

Investing

principles

93

94

GTM – UK |

22

46

30

-14

15 15

23

-10

19

12

20

11

21

-8

-15

-25

17

9

18

13

2

-33

25

11

-7

8

17

-2 -3

129

-13

14

-22

-9

-37

-9

-14

-22

-12

-18

-4

-18

-4-6

-10

-25

-11 -12

-30 -31

-17

-6 -7

-10-13

-43

-23

-17-19

-12 -12 -10

-15

-12

-4

-17

-8

-36

-50

-40

-30

-20

-10

0

10

20

30

40

'86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Annual returns and intra-year declines

FTSE All-Share intra-year declines vs. calendar-yea r returnsDespite average intra-year drops of 15.2% (median 12.2%), annual returns are positive in 24 of 34 years%

Source: FTSE, Refinitiv Datastream, J.P Morgan Asset Management. Returns shown are price returns in GBP. Intra-year decline refers to the largest market fall from peak to trough within a short time period during the calendar year. Returns shown are calendar years from 1986 to 2019. YTD is year-to-date. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Intra-year decline

Calendar-year return

Investing

principles

94

YTD

95

GTM – UK |

Global equities

Global high yield bonds

Emerging market debt

Global investment-grade bonds

UK Gilts

Cash

0

2

4

6

8

10

12

0 2 4 6 8 10 12 14

Asset class risk-return trade-off

Historic risk vs. return for selected asset classes%, annualised return 2004 – 2019 in GBP

Source: Bloomberg Barclays, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Volatility is the standard deviation of annual returns since 2004. Cash: JP Morgan Cash United Kingdom (3M); UK Gilts: Bloomberg Barclays Sterling Gilts; Global investment-grade bonds: Bloomberg Barclays Global Aggregate – Corporate; Emerging market debt: J.P. Morgan EMBI Global; Global high yield bonds: Bloomberg Barclays Global High Yield; Global equities: MSCI All-Country World Index (includes developed and emerging markets). Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Investing

principles

Volatility

Com

poun

d re

turn

95

Higher return

Higher risk

96

GTM – UK |

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

-175

-150

-125

-100

-75

-50

-25

0

25

50

75

100

125

150

175

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

S&P 500 and fund flows

US mutual fund and ETF flows and S&P 500USD billions, three-month net flows (LHS); index level (RHS)

Source: FactSet, Investment Company Institute, Standard & Poor’s, J.P. Morgan Asset Management. Fund flows are US long-term equity fund flows with ETF flows included from 2006 onwards. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.In

vesting

principles

96

3-month net fund flows S&P 500 index level

Avoid selling at the bottom

97

GTM – UK |

48% 49%

30%24% 24%

21%17% 17% 18%

13% 15%

-18%-24%

-7% -3% -1% -3%0% 1%

4%1%

4%

-50

-25

0

25

50

75

61%

-43%

US asset returns by holding period

Range of equity and bond total returns%, annualised total returns, 1950-present

Source: Strategas/Ibbotson, J.P. Morgan Asset Management. Large cap equity represents the S&P 500 Composite and Bonds represents the Strategas/Ibbotson US Government Bond Index and US Long-term Corporate Bond Index. Returns shown are per annum and are calculated based on monthly returns from 1950 to latest available and include dividends. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

Investing

principles

Large cap equity

Bonds

50/50 portfolio

97

1-yr rolling 5-yr rolling 10-yr rolling 20-yr rolling

98

Asset class returns (GBP)

Source: Bloomberg Barclays, FTSE, J.P. Morgan Economic Research, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Annualised return covers the period from 2008 to 2019. Vol. is the standard deviation of annual returns. Govt bonds: Bloomberg Barclays Global Aggregate Government Treasuries; HY bonds: ICE BofA Global High Yield; EMD: J.P. Morgan EMBI Global Diversified; IG bonds: Bloomberg Barclays Global Aggregate – Corporates; Cmdty: Bloomberg Commodity; REITs: FTSE NAREIT All REITS; DM Equities: MSCI World; EME: MSCI EM; Hedge funds: HFRI Global Hedge Fund Index; Cash: JP Morgan Cash United Kingdom (3M). Hypothetical portfolio (for illustrative purposes only and should not be taken as a recommendation): 30% DM equities; 10% EM equities; 15% IG bonds; 12.5% government bonds; 7.5% HY bonds; 5% EMD; 5% commodities; 5% cash; 5% REITs and 5% hedge funds. All returns are total return, in GBP, and are unhedged. Past performance is not a reliable indicator of current and future results. Guide to the Markets - UK. Data as of 30 September 2020.

GTM – UK |

Investing

principles

98

Govt bonds 52.6%

EME 59.4%

REITs 31.6%

EMD 8.1%

REITs 14.9%

DM Equities 25.0%

REITs 35.1%

REITs 8.2%

HY bonds 36.9%

EME 25.8%

Govt bonds 5.8%

DM Equities 23.4%

Govt bonds 8.7%

EME 4.8%

REITs 12.0%

EME 24.4%

IG bonds 26.5%

HY bonds 44.2%

EME 22.9%

REITs 8.1%

HY bonds 14.1%

Portfolio 6.0%

EMD 14.1%

EMD 7.0%

Cmdty 33.3%

DM Equities 12.4%

HY bonds 2.7%

REITs 23.1%

IG bonds 8.5%

Cmdty 4.2%

HY bonds 11.1%

Govt bonds 15.6%

EMD 21.8%

DM Equities 16.4%

Cmdty 20.5%

Govt bonds 7.1%

EME 13.4%

HY bonds 6.0%

DM Equities 12.1%

DM Equities 5.5%

EME 33.1%

Portfolio 5.6%

IG bonds 2.4%

EME 14.3%

DM Equities 4.6%

DM Equities 3.3%

EMD 10.6%

Cmdty 14.7%

Cash 6.9%

Portfolio 15.9%

HY bonds 17.5%

IG bonds 5.1%

EMD 12.3%

Hedge Funds 4.7%

IG bonds 9.6%

Govt bonds 2.3%

EMD 31.4%

EMD 0.7%

REITs 1.9%

Portfolio 12.6%

Hedge Funds 4.1%

Portfolio 0.9%

DM Equities 9.8%

REITs 14.2%

Hedge Funds 6.3%

EMD 15.6%

DM Equities 15.9%

HY bonds 3.4%

DM Equities 11.4%

REITs 1.3%

Portfolio 8.8%

IG bonds 2.0%

REITs 30.4%

HY bonds 0.6%

EMD 1.7%

EMD 10.6%

Portfolio 3.4%

HY bonds 0.3%

Portfolio 8.1%

HY bonds 13.9%

Portfolio 2.3%

REITs 13.5%

EMD 15.8%

Cash 1.2%

Portfolio 7.5%

Cash 0.5%

HY bonds 6.1%

Hedge Funds 1.9%

DM Equities 29.0%

Cash 0.4%

Cash 0.9%

HY bonds 9.3%

HY bonds 3.0%

Cash 0.0%

IG bonds 7.8%

DM Equities 12.9%

HY bonds -0.1%

IG bonds 6.1%

Portfolio 14.8%

Portfolio -1.3%

IG bonds 6.3%

IG bonds -1.5%

Hedge Funds 5.6%

HY bonds 1.4%

Portfolio 27.0%

REITs -0.2%

Portfolio -0.5%

IG bonds 7.2%

EMD 1.9%

IG bonds -1.5%

Govt bonds 6.2%

EMD 9.7%

Cmdty -10.9%

Cmdty 5.9%

Govt bonds 9.2%

DM Equities -4.3%

Cash 1.4%

EME -4.1%

Govt bonds 5.4%

Portfolio 1.2%

IG bonds 24.4%

IG bonds -0.4%

Hedge Funds -0.9%

Hedge Funds 4.4%

EME 1.5%

Govt bonds -1.8%

EME 5.4%

IG bonds 8.4%

REITs -13.2%

Cash 2.2%

IG bonds 9.2%

Hedge Funds -8.2%

Hedge Funds -1.0%

Govt bonds -6.1%

EME 4.3%

Cash 0.7%

Hedge Funds 22.3%

Govt bonds -2.0%

DM Equities -2.5%

Cmdty 3.5%

Cash 0.6%

Hedge Funds -1.9%

Hedge Funds 3.2%

Portfolio 7.8%

DM Equities -17.4%

Hedge Funds 1.0%

Hedge Funds 8.5%

Cmdty -12.7%

Govt bonds -2.6%

EMD -7.0%

Cash 0.6%

EME -9.7%

Govt bonds 21.3%

Hedge Funds -3.2%

Cmdty -5.7%

Govt bonds 1.5%

Cmdty -9.9%

EMD -2.2%

Cash 1.4%

Hedge Funds 7.2%

EME -35.2%

Govt bonds -8.6%

Cash 0.9%

EME -17.6%

Cmdty -5.4%

Cmdty -11.2%

Cmdty -11.8%

Cmdty -20.3%

Cash 0.7%

Cmdty -7.1%

EME -8.9%

Cash 1.0%

REITs -11.6%

REITs -3.0%

Cmdty -2.8%

Cash 1.7%

2010 20122011 20162009 2013 2014 2015

Ann. return

since ’08 Vol.20182017 20192008 Q3 ’20YTD

J.P. Morgan Asset Management: Index definitions

All indexes are unmanaged and an individual cannot invest directly in an index. Index returns do not include fees or expenses. The S&P 500 Index is widely regarded as the best single gauge of the U.S. equities market. This world-renowned index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Although the S&P 500 Index focuses on the large-cap segment of the market, with approximately 75% coverage of U.S. equities, it is also an ideal proxy for the total market. An investor cannot invest directly in an index. The Russell 1000 Index ® measures the performance of the 1,000 largest companies in the Russell 3000. The Russell 1000 Growth Index ® measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Value Index ® measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The MSCI Emerging Markets IndexSM is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. As of June 2007, the MSCI Emerging Markets Index consisted of the following 25 emerging market country indices: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.The MSCI ACWI (All Country World Index) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2009 the MSCI ACWIconsisted of 45 country indices comprising 23 developed and 22 emerging market country indices. The Tokyo Price Index (TOPIX) is a capitalization-weighted index lists all firms that are considered to be under the 'first section' on the TSE, which groups all of the large firms on the exchange into one pool. The second section groups all of the remaining smaller firms.The FTSE 100 Index is an index of the 100 largest companies (by market capitalization) in the United Kingdom.The FTSE All Share Index is an index of the 630 largest companies (by market capitalization) in the United Kingdom.The MSCI Value and Growth IndicesSM cover the full range of developed, emerging and All Country MSCI Equity indexes. As of the close of May 30, 2003, MSCI implemented an enhanced methodology for the MSCI Global Value and Growth Indices, adopting a two dimensional framework for style segmentation in which value and growth securities are categorized using different attributes - three for value and five for growth including forward-looking variables. The objective of the indexdesign is to divide constituents of an underlying MSCI Standard Country Index into a value index and a growth index, each targeting 50% of the free float adjusted market capitalization of the underlying country index. Country Value/Growth indices are then aggregated into regional Value/Growth indices. Prior to May 30, 2003, the indices used Price/Book Value (P/BV) ratios to divide the standard MSCI country indices into value and growth indices. All securities were classified as either "value" securities (low P/BV securities) or "growth" securities (high P/BV securities), relative to each MSCI country index.The following MSCI Total Return IndicesSM are calculated with gross dividends:This series approximates the maximum possible dividend reinvestment. The amount reinvested is the dividend distributed to individuals resident in the country of the company, but does not include tax credits.The MSCI Europe IndexSM is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe. As of June 2007, the MSCI Europe Index consisted of the following 16 developed market country indices: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. West Texas Intermediate (WTI) is underlying commodity in the New York Mercantile Exchange's oil futures contracts. The Bloomberg Barclays U.S. Aggregate Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. This U.S. Treasury Index is a component of the U.S. Government index. The Bloomberg Barclays High Yield Index covers the universe of fixed rate, non-investment grade debt. Pay-in-kind (PIK) bonds, Eurobonds, and debt issues from countries designated as emerging markets (e.g., Argentina, Brazil, Venezuela, etc.) are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included. The Bloomberg Barclays Euro-Aggregate Index consists of bond issued in the euro or the legacy currencies of the sovereign countries participating the European Monetary Union (EMU).The Global Bond Index Emerging Market Broad Diversified Index (GBI-EM) is a comprehensive global local emerging markets index, and consists of liquid, fixed-rate, domestic currency government bonds.

The Bloomberg Barclays Global Aggregate Corporate Index consists of corporate issues in Europe, the US and Asia-pacific regions. The J.P. Morgan EMBI Global Index includes U.S. dollar denominated Brady bonds, Eurobonds, traded loans and local market debt instruments issued by sovereign and quasi-sovereign entities.The JPMorgan Corporate Emerging Markets Bond Index (CEMBI): The CEMBI tracks total returns of US dollar-denominated debt instruments issued by corporate entities in Emerging Markets countries, and consists of an investable universe of corporate bonds. Both indices are also available in Diversified version. The MSCI World High Dividend Yield Index is composed of those securities that have higher-than-average dividend yield within its parent index, a track record of consistent dividend payments and the capacity to sustain future dividend payments.

J.P. Morgan Asset Management: Risks and disclosures

The Market Insights program provides comprehensive data and commentary on global markets without reference to products. Designed as a tool to help clients understand the markets and support investment

decision-making, the program explores the implications of current economic data and changing market conditions. For the purposes of MiFID II, the JPM Market Insights and Portfolio Insights programs are

marketing communications and are not in scope for any MiFID II / MiFIR requirements specifically related to investment research. Furthermore, the J.P. Morgan Asset Management Market Insights and Portfolio

Insights programs, as non-independent research, have not been prepared in accordance with legal requirements designed to promote the independence of investment research, nor are they subject to any

prohibition on dealing ahead of the dissemination of investment research.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product,

strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used

are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing

in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own professional advisers, if any

investment mentioned herein is believed to be suitable to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or

investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is

considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of

investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not a

reliable indicator of current and future results. J.P. Morgan Asset Management is the brand for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. To the extent permitted by applicable law,

we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset

Management in accordance with our Company’s Privacy Policy (www.jpmorgan.com/global/privacy). For further information regarding our local privacy policies, please follow the respective links: Australia

(www.jpmorganam.com.au/wps/portal/auec/PrivacyPolicy), EMEA (www.jpmorgan.com/emea-privacy-policy), Japan (www.jpmorganasset.co.jp/wps/portal/Policy/Privacy), Hong Kong (https://am.jpmorgan.com/hk/en/asset-

management/per/privacy-statement/), Singapore (www.jpmorganam.com.sg/privacy) and Taiwan (www.jpmorgan.com/country/GB/en/privacy/taiwan).

This communication is issued by the following entities: in the United Kingdom by JPMorgan Asset Management (UK) Limited, which is authorized and regulated by the Financial Conduct Authority; in other European

jurisdictions by JPMorgan Asset Management (Europe) S.à r.l.; in Hong Kong by JPMorgan Asset Management (Asia Pacific) Limited, or JPMorgan Funds (Asia) Limited, or JPMorgan Asset Management Real Assets (Asia)

Limited; in Singapore by JPMorgan Asset Management (Singapore) Limited (Co. Reg. No. 197601586K), or JPMorgan Asset Management Real Assets (Singapore) Pte Ltd (Co. Reg. No. 201120355E), this advertisement or

publication has not been reviewed by the Monetary Authority of Singapore; in Taiwan by JPMorgan Asset Management (Taiwan) Limited; in Japan by JPMorgan Asset Management (Japan) Limited which is a member of the

Investment Trusts Association, Japan, the Japan Investment Advisers Association, Type II Financial Instruments Firms Association and the Japan Securities Dealers Association and is regulated by the Financial Services Agency

(registration number “Kanto Local Finance Bureau (Financial Instruments Firm) No. 330”); in Australia to wholesale clients only as defined in section 761A and 761G of the Corporations Act 2001 (Cth) by JPMorgan Asset

Management (Australia) Limited (ABN 55143832080) (AFSL 376919); in Brazil by Banco J.P. Morgan S.A.; in Canada for institutional clients’ use only by JPMorgan Asset Management (Canada) Inc., and in the United States by

J.P. Morgan Institutional Investments, Inc., member of FINRA; J.P. Morgan Investment Management Inc. or J.P. Morgan Alternative Asset Management, Inc.

In APAC, distribution is for Hong Kong, Taiwan, Japan and Singapore. For all other countries in APAC, to intended recipients only.

Copyright 2020 JPMorgan Chase & Co. All rights reserved.

Prepared by: Karen Ward, Tilmann Galler, Vincent Juvyns, Maria Paola Toschi, Michael Bell, Hugh Gimber, Ambrose Crofton, Jai Malhi and Max McKechnie.

Unless otherwise stated, all data as of 30 September 2020 or most recently available.

Guide to the Markets - UK

JP-LITTLEBOOK

0903c02a82868379

Guide to the Markets · 58. US bull and bear markets 59. US equity market drawdowns and recoveries...

Documents

Transcript of Guide to the Markets · 58. US bull and bear markets 59. US equity market drawdowns and recoveries...