U.S. equity risk premium hits its lowest level since 2002; JPMorgan: rising interest rates will inflict more pain than in the past two decades.

According to JPMorgan’s latest research report, the S&P 500 Equity Risk Premium (ERP) has fallen to approximately 2.1%—not only over 100 basis points below its historical average but also the lowest since 2002. This trend is especially noteworthy against the backdrop of recent sustained increases in real bond yields. JPMorgan’s Global Market Strategy team has accordingly issued a warning: in this low-risk-premium environment, equity markets’ sensitivity to interest rate changes will rise significantly, and the resulting impact may exceed investors’ expectations over the past two decades. Analysts highlight a threefold chain reaction: First, equities’ sensitivity to bond yields will rise systematically; second, long-term investors will have stronger incentives to rebalance assets from stocks into bonds; third, the positive correlation between stocks and bonds—already established since the 2022 inflation shock—will be further reinforced. For risk-parity strategies relying on bond duration to hedge equity risk, these developments pose persistent headwinds. Risk premium falls to 2.1%, lowest since 2002 JPMorgan calculates the ERP using a Dividend Discount Model (DDM) framework: it back-calculates the equity discount rate by plugging the current S&P 500 index price into a discounted cash flow equation, then subtracts the 10-year U.S. Treasury real yield. Strategist Nikolaos Panigirtzoglou and his team estimate the current S&P 500 ERP at roughly 2.1%, about 100 basis points below its historical average. This figure has dropped below the cyclical low of 2.4% recorded in Q3 2007; subsequent equity market gains coupled with further rises in real bond yields have driven the ERP down yet another notch. Historical data shows that ERP likewise remained low between 1974 and 1998—a period encompassing both high inflation and the subsequent disinflation phase. JPMorgan notes that during that era, stock returns exhibited markedly heightened sensitivity to bond yields, sometimes moving almost in lockstep. With today’s ERP having retreated into a comparable range, a similar linkage mechanism may re-emerge. Mounting pressure for equity-bond rebalancing; investors’ equity overweight reaches highest level since 2002 The narrowing ERP carries a second implication for asset allocation. JPMorgan’s estimation of implied allocations among global non-bank investors shows the current equity overweight relative to bonds is the highest since 2002; separate analysis of G4 pension funds and insurers (covering the U.S., U.K., eurozone, and Japan) yields identical conclusions. The report notes that the current low-ERP regime could theoretically persist—if AI-driven productivity gains continue boosting corporate earnings, then such a low premium would be fundamentally justified.

What do you think about the conduct of international investment banks like JPMorgan? Do they still have any ethical bottom line?

Major international investment banks have sharply downgraded their stock ratings and target prices across dozens of Chinese internet companies. JPMorgan alone downgraded over twenty U.S.-listed Chinese firms, declaring them all ‘uninvestable in the near term’—with no major internet company spared. Alibaba’s target price was slashed from $180 to $65—a 64% cut. Tencent’s target price was slashed by 54%, from HK$570 to HK$265. Bilibili’s target price was slashed from $80 to $15—a staggering 81% reduction. Meituan’s target price was slashed from HK$295 to HK$90—nearly a 70% cut. Pinduoduo’s target price plunged from $150 to $23—close to an 80% drop. Overnight, the companies remain unchanged; the markets remain unchanged—yet target prices can plummet by as much as 81%. The integrity of research analysts seems entirely absent; even Sichuan opera face-changing cannot match the speed of these revisions. This is clearly deliberate suppression—piling on when the companies are already down. Can such rating reports retain any credibility or public trust?

JPMorgan cuts target for Eastman Chemical stock from USD 82.00 to USD 66.00

Oct 20, 2026

JPMorgan downgraded Eastman Chemical to Neutral and lowered its price target to $66, citing commodity value concerns. However, the company reported a 9.9% increase in Q2 2026 revenue to $2.51 billion, beating expectations.

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JPMorgan cuts target for Eastman Chemical stock from USD 82.00 to USD 66.00

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