The Cut That Isn't Coming

The Big Story: The Cut That Isn't Coming

J.P. Morgan published its updated rate forecast this week: no cuts in 2026. The next move, they believe, is a 25-basis-point increase in the third quarter of 2027.

Not delayed cuts. A hike.

Goldman Sachs had already pushed its first cut call from June to September. Seven US central bank officials have pencilled in zero cuts for the year. But J.P. Morgan's call is qualitatively different. It is the first major bank to say the direction has reversed. The rate relief that was supposed to arrive this year is not coming, and the next move may take money off the table rather than add to it.

The backdrop makes it hard to argue. Oil closed at $107.58 on Saturday, up 2.14% on the week. The second round of US-Iran talks in Pakistan was cancelled outright. Trump pulled envoys Witkoff and Kushner. Iran's Foreign Ministry confirmed: "No meeting is planned." A Dallas Fed Energy survey found roughly 80% of oil and gas executives expect the Strait of Hormuz to remain closed until August or later. Baker Hughes concurred: the second half of 2026 at the earliest.

The US central bank meets Monday and Tuesday. The hold is certain. What matters is tone: whether the statement begins shifting language from "patient" toward "vigilant." March CPI (how much more everyday goods cost compared to a year ago) printed 3.3% year-on-year when oil was at $95. It is now $107.

A Dutch professional in KL holding a variable-rate EUR mortgage. A British executive in Singapore with short-duration bonds positioned for rate cuts. A German engineer in Doha with USD savings waiting for a better entry point. All were planning for a world where rates come down. J.P. Morgan just told them that world may not arrive.

What Else Is Moving

The S&P 500 closed at a new all-time high. 7,165.08 on 25 April, up 0.8%, driven by Intel's 23% earnings surge. The record close landed the same day Iran-US talks were formally cancelled. Markets are pricing resolution. Reality is delivering the opposite.

Shooting at the White House Correspondents' Dinner. Saturday evening, a gunman charged a security checkpoint with multiple weapons. Trump was evacuated, unharmed. One Secret Service officer was shot and saved by his vest. Markets were closed. Monday's open will price this alongside the central bank decision.

Gold recovering. Spot at approximately $4,718, up from $4,707 earlier in the week. A slight bounce after four consecutive declines. At GBP/USD 1.351, roughly £3,492 per troy ounce for British holders. The talks collapse and the Correspondents' Dinner shooting may reignite the geopolitical bid that dollar strength had been suppressing.

MYR steady at 3.96. Oil above $107 reinforces Malaysia's net-exporter position. Bank Negara holds its key interest rate at 2.75%. For EUR or GBP earners spending in ringgit, the conversion remains at the favourable end of the 12-month range.

The Expat Takeaway

For the past year, the plan for most long-term investors has been straightforward: hold cash at reasonable yields, wait for rate cuts, redeploy when the cycle turns. J.P. Morgan just suggested the cycle may not turn at all. Not this year. Possibly not until it turns the wrong way.

That does not mean panic. It means checking whether your structure assumed something that may not happen.

Three questions worth asking before the central bank statement drops. Is your cash allocation earning yield, or is it parked waiting for a rate environment that may never arrive? Is your fixed income positioned for rates staying here, or only for rates going lower? And does your currency exposure assume a weaker dollar that a hawkish central bank will not deliver?

If your answers hold regardless of what the statement says on Wednesday, this is a week to watch. If they don't, the issue was built into the structure before J.P. Morgan said a word.