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American Politics and Government in Crisis

By Chris Seter

Global Investment Strategist, J.P. Morgan Private Bank

By Chris Seter

The U.S. Debt Limit debate is back in the limelight after taking a backseat to the banking sector tumult in March. Two catalysts are driving the recent headlines:

  1. This week, Republicans started to flesh out their proposal for spending cuts in exchange for raising the limit. The battle lines are now being drawn for negotiations.
  2. Tax revenue data following the April 18 filing deadline will now allow investors to better pinpoint the X-date (potential date of default). For now, it’s widely estimated to fall between June and August but estimates should shift in the coming days.

We expect to see brinkmanship on the debt limit in the months ahead, which may cause some volatility in risk assets and the U.S. dollar. We also think parts of the T-bill curve will further price in a risk premium as the X-date draws closer. Our expectation is that the debt limit will be raised ahead of a potential default as it always has. The negative consequences are just too great for political leadership across both sides of the aisle to allow it to happen. But in the meantime, there are potential steps to deal with debt limit anxiety. Investors can look to avoid those T-bills exposed to the X-date and to hedge potential volatility in risk assets and currencies.

In this note, we provide views and education on all aspects of the debt limit including the basics, the path forward and how investors can brace for potential volatility induced by another debt limit showdown. On the latter, 2011 presents one analog for how markets can respond to worries of a US default; in the month leading up to the debt ceiling deadline that August, the S&P 500 fell more than 6%; the 10-year Treasury yield rallied nearly 60 basis points (bps); while the U.S. dollar weakened by 5%-10% against alternative safe havens like the Swiss franc, gold and Japanese yen.

What is the debt limit?

At the most basic level, it is a law that denotes the maximum amount of debt outstanding the US government can have at any given time. It came into existence in 1917 when Congress loosened rules on debt sales but imposed a statutory limit. Since then it has been raised dozens of times and temporarily suspended even more, often as debt levels approach the ceiling. Only in the last 10 years or so has raising it become regularly contentious (outside of an episode in 1995), generating a number of so-called “crises” that are completely self-inflicted and not driven by market forces. The ceiling was most recently raised to $31.4 trillion in 2021.

What and when is the X-date?

As the debt limit approaches, the Treasury runs down its cash balance at the Fed and uses “extraordinary measures” to keep expenditures flowing (in essence, accounting measures that limit some government investments and reduces the amount of debt subject to the limit). The Treasury began this process back in January. That runway is broadly estimated to last until at least June – the so-called X-date or the day cash officially runs out and the government may not be able to pay maturing debt. Congress needs to either temporarily suspend the debt limit or raise it prior to the X-date or it risks missing coupon or principal payments on Treasury securities (i.e. default).

Estimates for the X-date currently range from early-June to August. April tax revenue data will allow estimates to lock in on a more precise date. While we still don’t have data following the April 18 deadline, the early read is that taxes are coming in a bit weaker than expected and may push the X-date to earlier end of the range.

How has this happened in the past?

While debt limit impasses are now common, 2011 carries the most notoriety. Congress increased the ceiling just days before the X-date, the closest call on record. Days later, S&P downgraded the US to AA+. Risk assets reacted negatively: The dollar rallied against risk-sensitive currencies but sold off against other safe havens (CHF, JPY and gold), while stocks sank and credit spreads widened. However, Treasuries rallied strongly. The outsized reaction was likely compounded by fears of a double-dip recession amid elevated worries on fiscal matters with the Tea Party rising in popularity and the Euro crisis unfolding.

Outside of 2011, markets have largely taken brinkmanship in stride. While 2015 appears to have been a volatile period, credit spread widening was more driven by energy market issues and an industrial recession. The Treasury selloff in 2018 was driven by worries of Fed tightening rather than the debt limit, in our view. In late-2021, increasing the limit went down to the wire but with limited impact for risk assets.

This chart describes the movement of US investment grade spreads and 10Y US treasury yields since January 2011.

For the 10Y treasury yields line, the first data point came in at 3.3% in January 2011.

Then it declined to 1.4% in July 2012.

Before climbing back up to 3.0% in December 2013.

Then it declined again to 1.4% in July 2016.

Then it went back up again to 3.2% in October 2018.

Before declining again and troughed at 0.5% in August 2020.

It went on an upward ramp until it peaked at 4.2% in October 2022.

Then it ended the series a bit lower at 3.6% in April 2023.

For the investment grade spreads line, the first data point came in at 159 in January 2011.

Then it went up and peaked at 271 in October 2011.

It then went all the way down and bottomed at 123 in July 2014.

It then went on a continued rise until it peaked at 254 in February 2016.

It then declined and reached a low point at 111 in February 2018.

Soon it went up and skyrocketed at 387 in March 2020.

It then rapidly declined again until it reached a bottom at 105 in September 2021.

It then went up and stabilized with the latest data point at 150 in April 2023.

There are 7 grey vertical bars that represent debt limit episodes.

1. 8/2/2011, Limit increased days before X-Date. S&P downgrade.

2. 10/17/2013, Limit suspended weeks before X-Date

3. 11/2/2015, Limit suspended weeks before X-Date

4. 9/8/2017, Limit suspended ~1 month before X-Date

5. 2/9/2018, Limit raised 1 month before X-Date

6. 8/2/2019, Limit suspended ~3 months before X-Date

7. 12/14/2021, Limit raised days before X-Date

How are negotiations progressing?

Republicans have started to detail their negotiating stance for a debt limit increase. Over the weekend, a proposal for spending cuts was leaked to the press. On Monday House Speaker Kevin McCarthy gave a speech at the NYSE and appeared on CNBC calling for spending cuts in order to raise the limit. The bill has not been finalized yet but media reports call for a $4.5 trillion reduction in budget deficits in over a decade in exchange for a temporary suspension of the limit through March of 2024 or a $1.5 trillion increase. The details include a significant reduction to non-defense discretionary spending, a reversal of student debt cancellation, social program work requirements and a return of unused COVID-19 funds.

Republican leadership is meeting this week to iron out the details of the bill. Even if the GOP is able to pass the bill in House over the next few weeks (an uncertainty given its slim majority and fractured caucus), the proposal will likely be a non-starter for Democrats as it impacts some of President Biden’s key programs. Democrats have publicly pushed for a ‘clean’ bill that only raises the limit. But there may be room for compromise smaller non-defense spending cuts, unused COVID funds and energy permitting reform1. Either way, there is limited incentive for either side to make concessions well ahead of the X-date and negotiations look set to go down to the wire

How could this to play out?

There are three broad scenarios. Our expectation is that even if it comes down to the wire, the debt limit is increased ahead of the X-date (#1). But it is possible we go through the X-date; in that event, payments on Treasury debt can still be made (#2) or delayed (#3).

1) Debt ceiling increased ahead of the potential default date (X-date). Has Always Happened.

This has happened every time we’ve been up against the limit in the past 100 years. We may see some brinkmanship that boosts yield on T-bills maturing in the wake of X-date but this would only be a temporary factor. We think this is the most likely outcome but it doesn’t mean there won’t be market volatility.

2) Go through X-date without an increase but Treasury still makes interest payments and avoids technical default. Never Happened Before.

This could be accomplished in several ways. Most likely in our view is prioritization of security payments at the expense of cuts to spending on discretionary items. It would in effect look like a government shutdown (which have always resulted from failure to pass a budget and not directly due to the debt ceiling). The Treasury was reportedly prepared to do this in 2011 and 2013. This would represent a big drop in government spending and direct hit to economic activity on top of financial market sentiment.

Other ways to avoid default include simply ignoring the debt limit on grounds it violates the fourteenth amendment (likely inviting a long legal battle). Or the Treasury could mint a coin denominated at whatever amount they choose and deposit at the Fed, providing funds to be used without increasing debt levels (unlikely but widely cited as a far-fetched option)

3) Go through X-date and delay payments – a technical default. Never Happened Before.

This is the worst case scenario. Nobody knows the full consequences. But this would likely be a major negative for most financial assets. See hedging section for cross-asset thoughts.

For the technical details - this would not kick off some sort of bankruptcy process for all Treasury securities like one would expect for a corporate default. There are no details on what constitutes a default or bankruptcy proceedings in the closest thing Treasuries have to a prospectus.

Even if defaulted on, Treasury securities could continue to trade as normal or be used as repo collateral if Treasury announces its intention to postpone a payment date in advance (the day before the payment is due). The price impact on defaulted Treasuries may be limited if markets expect just a temporary delay to payments.

We see very low probability this happens but if it does, it likely elicits a negative enough market response to get Congress moving (similar to say the failed vote on TARP in 2008). But then, even if the debt limit is subsequently raised, there are questions over whether Treasuries would need to trade with a permanent increased risk premium.

This most likely leads to further credit rating downgrades, certainly while the US is in default, and even after payments have been made following an eventual increase in the limit.

Further downgrades to the sovereign potentially leads to downgrades in the GSE and muni space as well. Specific agency or muni credits linked to the federal credit rating include: certain AAA housing bonds, AAA state HFAs, AAA higher education and not-for-profits, and AAA infrastructure issuers.

How is this impacting T-bill valuations?

Historically, yields on T-bills due to mature directly after the X-date cheapen in the few weeks leading up to it. This was visible in 2021 when T-bill yields for late-October maturities (immediately after the X-date) spiked at the start of the month and then dropped once an agreement started working its way through Congress.

The chart describes the percent yields on T-bills due to mature immediately after mid-October X-date. It includes T-Bill Due 10/21/2021, T-Bill Due 10/26/2021, and T-Bill Due 10/28/2021 in a line format.

For the T-Bill Due 10/21/2021 line, the first data point came in at 0.04% in August 2021.

It stayed relatively flat until it skyrocketed to 0.15% in October 2021.

It then came down with the latest data point at 0.01% later in October 2021.

For the T-Bill Due 10/26/2021 line, the first data point came in at 0.05% in August 2021.

It stayed relatively flat until it skyrocketed to 0.14% in October 2021.

It then declined and ended the series at 0.02% later in October 2021.

For the T-Bill Due 10/28/2021 line, the first data point came in at 0.04% in August 2021.

It stayed relatively flat until it skyrocketed at 0.13% in October 2021.

Then it declined and ended the series at 0.02% later in October 2021.

The chart also has a textbox saying that on 10/7/2021: Senate passes debt limit increase.

Debt limit angst is already likely contributing to some of the dislocation in the T-bill curve, where the 1 million on the run bill has rallied approximately 125 basis points since April 3 and is trading roughly 150 basis points below the federal funds rate. Money market funds are favoring the very front end of the curve as a means to avoid maturities in line with the potential X-date. That is exacerbated by the huge inflows into money funds since SIVB’s collapse which occurred during a seasonal period of low issuance as tax season boosts government revenue. The debt limit has also capped issuance as Treasury cannot issue to rebuild its cash levels. Until the limit is raised, we expect to see dislocations in the T-bill curve, with tight valuations in some areas and potential risk premium building in others.

The chart describes the distortion of bill yields by the debt limit. It includes T-Bill Yields by Maturity Date and Expected Federal Funds Rate.

It also includes a grey-shaded area that represents a X-date Range that went from June 2023 to August 2023.

For the T-Bill Yields by Maturity Date line, the first data point came in at 4.4% on May 16th, 2023.

Then it went down and bottomed at 3.3% on May 30th, 2023.

Then it shot up until it reached 5.4% in June 2023.

Then it went down until it got to 4.6% in July2023.

Before going back up to 5.2% in October 2023.

Later it declined at stabilized until the last data point at 4.6% in January 2024.

For the Expected Federal Funds Rate line, the first data point came in at 5.1% on May 3rd, 2023.

Then it steadily declined until the last data point at 4.2% in January 2024. 

What to do about it? While we do think bills will be paid, avoiding maturities near the X-date might prevent undue anxiety. Investors who need to have liquidity at that time could use a CD or another alternative, such as a structured product that can offer higher yields than deposits with diversified counterparty risks. Extending to a maturity beyond the X-date could work but there is always the possibility it gets delayed.

Does the debt limit pose any risks to money market funds?

The key risks for a money market fund (MMF) are 1) holding defaulted securities or 2) investor redemptions in fear of a MMF holding defaulted securities. We think the likelihood of Treasury defaulting is low and MMF are continuing to be a major beneficiary of Fed rate hikes. As we have experienced with prior hiking cycles, bank deposit rates have lagged money market rates and MMF assets under management have surged. We expect investors to continue to migrate to money funds until a Fed cutting cycle begins.

It’s possible you see floating net asset values (NAV) price lower if debt ceiling brinkmanship ensues. hat said, no stable NAV JPM MMF has ever “broken the buck”. Regulations and low weighted average maturities make us confident that track record will remain intact. 2a-7 regulations require high percentages of daily and weekly liquid assets to manage potential outflows. Adding even more liquidity to meet potential outflows, the Feds reverse repo facility holds over $2 trillion of MMF assets at an overnight tenor. For stable NAV funds such as liquid funds, a good case study was March of 2020 when short term funding markets saw tremendous outflows and the funds still came nowhere near the levels where the fixed $1 NAV would come into question.

The chart describes the weighted average maturity of the Treasury money market fund, which has decreased as shown in the line.

The first data point came in at 49.6 days in December 2020.

Then it slowly and steadily declined until the last data point at 13.8 days in April 2023.

Are Credit Default Swaps a good way to hedge?

While its possible CDS pay off in a tail risk event, there is also the potential for no payoff if the limit is raised ahead of the X-date or even if we go through the X-date for a day or two but it doesn’t trigger the three day grace period.

Credit default swaps are a derivative instrument offering insurance against default of an underlying issuer. CDS spreads show the price to lock in an insurance agreement. Going long a CDS at 100 basis points implies paying $10 a year to insure $1,000 worth of credit exposure. The cost of insuring against a US government default has increased recently. 1Y US CDS (priced in EUR) are currently 107 basis points versus a peak of 80 basis points back in 2011.

While US Treasury bond documents do not define a default, ISDA can declare a credit event has occurred if Treasury delays payment by three days (the grace period). That would trigger a payoff based on the price of the Cheapest-to-Deliver Treasury (i.e., lowest priced bond). Currently the T ¼ of 2050 is trading at ~$55, meaning a long CDS position would pay off $45 for $100 of exposure.

We can use these prices to derive the market-implied probability of default.2

Probability of Default = CDS Spread / Loss Given Default

With 1Y CDS at a 100 basis points spread, that implies a 2.5% chance of default, below the peak of 6% in 2011.

How else to hedge market volatility from the debt limit?

We think the most clear-cut way to hedge an unruly debt limit episode is to play for a risk off environment. 2011 presents one analog for how markets can respond to worries of a US default. The table below shows the performance of various assets in the six months leading up to the August 2011 debt limit deadline, as well as the six months after. The S&P 500 declined 6% in the month leading up to August X-date, while total returns in the credit space remained resilient given the large decline in risk-free rates. Elsewhere, the Swiss franc and gold rallied as much as 10% against the USD while JPY rallied 5% over that time. EURUSD was flat but there were other issues happening then like the European sovereign debt crisis that aren’t present today. Notably, more risk sensitive currencies like EMFX did not provide a safe haven as negotiations went down to the wire.

The chart shows the total return of different assets in their local currency 6 months before, 1 month before, 1 month after, and 6 months after the 2011 debt ceiling episode. Positive returns are highlighted green and negative returns are highlighted red.

The S&P 500 was down -2.9% 6 months before the resolution, -6.3% 1 month before, -6.1% 1 month after, and up +6.9% 6 months after.

The 10yr Treasury yield was down -87bps 6 months before the resolution, -57bps 1 month before, -62bps 1 month after, and -79bps 6 months after.

U.S. Investment Grade was up +7.2% 6 months before the resolution, +3.8% 1 month before, +0.2% 1 month after, and +3.3% 6 months after.

U.S. High Yield was up +3.3% 6 months before the resolution, +0.7% 1 month before, down -3.4% 1 month after, and up +2.4% 6 months after.

USD vs JPY was down -5.5% 6 months before the resolution, -4.6% 1 month before, -0.5% 1 month after, and -1.3% 6 months after.

USD vs EUR was down -2.9% 6 months before the resolution, up +1.9% 1 month before, +0.1% 1 month after, and +7.9% 6 months after.

USD vs CHF was down -17.7% 6 months before the resolution, -9.1% 1 month before, up +1.5% 1 month after, and up +14.2% 6 months after.

DXY was down -3.4% 6 months before the resolution, up +0.2% 1 month before, +0.3% 1 month after, and +6.0% 6 months after.

Oil was up +3.2% 6 months before the resolution, -1.2% 1 month before, -7.8% 1 month after, and up +2.7% 6 months after.

Gold was up +23.3% 6 months before the resolution, +10.8% 1 month before, +14.1% 1 month after, and +7.0% 6 months after.

All told, we would look to short USD positions versus alternative safe havens and equity hedges as the most direct protection against a disorderly debt ceiling episode. Meanwhile, we are not worried about long duration Treasury yield positions as they would most likely benefit from the negative growth implications an episode could result in.

Past performance is no guarantee of future results and investors may get back less than the amount invested. It is not possible to invest directly in an index.

References

1.

Piper Sandler, April 16 2023.

2.

JPM IB Global Credit Research, February 2023.

KEY RISKS

• Investments in commodities may have greater volatility than investments in traditional securities. The value of commodities may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Investing in commodities creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

• Preferred securities are typically long dated securities with call protection that fall in between debt and equity in the capital structure. Preferred securities carry various risks and considerations which include: concentration risk; interest rate risk; lower credit ratings than individual bonds; a lower claim to assets than a firm's individual bonds; higher yields due to these risk characteristics; and “callable” implications meaning the issuing company may redeem the stock at a certain price after a certain date.

• Holders of foreign securities can be subject to foreign exchange risk, exchange-rate risk and currency risk, as exchange rates fluctuate between an investment’s foreign currency and the investment holder’s domestic currency. Conversely, it is possible to benefit from favorable foreign exchange fluctuations.

• Investments in emerging markets may not be suitable for all investors. Emerging markets involve a greater degree of risk and increased volatility. Changes in currency exchange rates and differences in accounting and taxation policies outside the U.S. can raise or lower returns. Some overseas markets may not be as politically and economically stable as the United States and other nations. Investments in emerging markets can be more volatile.

• Not all option strategies are suitable for all investors. Certain strategies may expose investors to significant potential risks and losses. For additional risk information, please request a copy of “Characteristics and Risks of Standardized Options.” We advise investors to consult their tax advisors and legal counsel about the tax implications of these strategies. Investors are urged to carefully consider whether options or option-related products or strategies are suitable for their needs.

• Structured products involve derivatives and risks that may not be suitable for all investors. The most common risks include, but are not limited to, risk of adverse or unanticipated market developments, issuer credit quality risk, risk of lack of uniform standard pricing, risk of adverse events involving any underlying reference obligations, risk of high volatility, risk of illiquidity/little to no secondary market, and conflicts of interest. Before investing in a structured product, investors should review the accompanying offering document, prospectus or prospectus supplement to understand the actual terms and key risks associated with each individual structured product. Any payments on a structured product are subject to the credit risk of the issuer and/or guarantor. Investors may lose their entire investment, i.e., incur an unlimited loss.

• The risks listed above are not complete. For a more comprehensive list of the risks involved with this particular product, please speak to your J.P. Morgan team.

This material is for information purposes only, and may inform you of certain products and services offered by private banking businesses, part of JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at accessibility.support@jpmorgan.com for assistance. Please read all Important Information.

GENERAL RISKS & CONSIDERATIONS

Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan team.

UNDERSTANDING LTCMAS

JPMAM Long-Term Capital Market Assumptions (LTCMAs): Given the complex risk-reward trade-offs involved, we advise clients to rely on judgment as well as quantitative optimization approaches in setting strategic allocations. Please note that all information shown is based on qualitative analysis.

Exclusive reliance on the above is not advised. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. Note that these asset class and strategy assumptions are passive only – they do not consider the impact of active management. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Assumptions, opinions and estimates are provided for illustrative purposes only. They should not be relied upon as recommendations to buy or sell securities. Forecasts of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material has been prepared for information purposes only and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. The outputs of the assumptions are provided for illustration/discussion purposes only and are subject to significant limitations. “Expected” or “alpha” return estimates are subject to uncertainty and error. For example, changes in the historical data from which it is estimated will result in different implications for asset class returns. Expected returns for each asset class are conditional on an economic scenario; actual returns in the event the scenario comes to pass could be higher or lower, as they have been in the past, so an investor should not expect to achieve returns similar to the outputs shown herein. References to future returns for either asset allocation strategies or asset classes are not promises of actual returns a client portfolio may achieve. Because of the inherent limitations of all models, potential investors should not rely exclusively on the model when making a decision. The model cannot account for the impact that economic, market, and other factors may have on the implementation and ongoing management of an actual investment portfolio. Unlike actual portfolio outcomes, the model outcomes do not reflect actual trading, liquidity constraints, fees, expenses, taxes and other factors that could impact the future returns. The model assumptions are passive only – they do not consider the impact of active management. A manager’s ability to achieve similar outcomes is subject to risk factors over which the manager may have no or limited control. The views contained herein are not to be taken as advice or a recommendation to buy or sell any investment 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 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. 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 financial professional, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. 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 yield are not a reliable indicator of current and future results.

NON-RELIANCE

Certain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/ reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.

Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.

IMPORTANT INFORMATION

This material is for informational purposes only, and may inform you of certain products and services offered by J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at accessibility.support@jpmorgan.com for assistance. Please read all Important Information.


GENERAL RISKS & CONSIDERATIONS. Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan representative.

NON-RELIANCE. Certain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.

Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.

Legal Entity and Regulatory Information.

J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

Bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.

This document may provide information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (“JPMS”). The agreements entered into with JPMS, and corresponding disclosures provided with respect to the different products and services provided by JPMS (including our Form ADV disclosure brochure, if and when applicable), contain important information about the capacity in which we will be acting. You should read them all carefully. We encourage clients to speak to their JPMS representative regarding the nature of the products and services and to ask any questions they may have about the difference between brokerage and investment advisory services, including the obligation to disclose conflicts of interests and to act in the best interests of our clients.

J.P. Morgan may hold a position for itself or our other clients which may not be consistent with the information, opinions, estimates, investment strategies or views expressed in this document.  JPMorgan Chase & Co. or its affiliates may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as an underwriter, placement agent, advisor or lender to such issuer.

LEARN MORE ABOUT OUR FIRM AND INVESTMENT PROFESSIONALS AT FINRA BROKERCHECK.

To learn more about J.P. Morgan’s investment business, including our accounts, products and services, as well as our relationship with you, please review our J.P. Morgan Securities LLC Form CRS (PDF) and Guide to Investment Services and Brokerage Products.

This website is for informational purposes only, and not an offer, recommendation or solicitation of any product, strategy service or transaction. Any views, strategies or products discussed on this site may not be appropriate or suitable for all individuals and are subject to risks. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, legal, tax and other professional advisors that take into account all of the particular facts and circumstances of an investor's own situation.

This website provides information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (JPMS). When JPMS acts as a broker-dealer, a client's relationship with us and our duties to the client will be different in some important ways than a client's relationship with us and our duties to the client when we are acting as an investment advisor. A client should carefully read the agreements and disclosures received (including our Form ADV disclosure brochure, if and when applicable) in connection with our provision of services for important information about the capacity in which we will be acting.

J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA, and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

INVESTMENT AND INSURANCE PRODUCTS ARE: • NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, JPMORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES • SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED

Investments in alternative investment strategies is speculative, often involves a greater degree of risk than traditional investments including limited liquidity and limited transparency, among other factors and should only be considered by sophisticated investors with the financial capability to accept the loss of all or part of the assets devoted to such strategies.

Borrowing with securities as collateral involves certain risks, including the possibility that you may need to deposit additional securities and/or cash in the account to meet a maintenance call, and that securities in the account may be sold to meet the maintenance call.  Proper management of your account and a thorough understanding of the conditions that may affect your investments will assist you in effectively using the margin lending program.​

Please read additional Important Information in conjunction with these pages.

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Check the background of our firm and investment professionals on FINRA's BrokerCheck

To learn more about J. P. Morgan’s investment business, including our accounts, products and services, as well as our relationship with you, please review our J.P. Morgan Securities LLC Form CRS and Guide to Investment Services and Brokerage Products.

This website is for informational purposes only, and not an offer, recommendation or solicitation of any product, strategy service or transaction. Any views, strategies or products discussed on this site may not be appropriate or suitable for all individuals and are subject to risks. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, legal, tax and other professional advisors that take into account all of the particular facts and circumstances of an investor's own situation. 

This website provides information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC ("JPMS"). When JPMS acts as a broker-dealer, a client's relationship with us and our duties to the client will be different in some important ways than a client's relationship with us and our duties to the client when we are acting as an investment advisor. A client should carefully read the agreements and disclosures received (including our Form ADV disclosure brochure, if and when applicable) in connection with our provision of services for important information about the capacity in which we will be acting.

INVESTMENT AND INSURANCE PRODUCTS ARE: • NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, JPMORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES • SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED

J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

Please read additional Important Information in conjunction with these pages.