As inflation risks decrease, the world economy may avoid recession, according to a JP Morgan analyst note.

The figures suggest a probable gentle landing for the global economy, according to JP Morgan analysts, who also added that the Federal Reserve may have “overreacted” by raising interest rates by 75 basis points in July.

The firm noted in a note dated Monday that a slew of recent data from significant economies point to easing inflation and wage pressures as well as stabilising consumer sentiment.

Moderating inflation and job growth have increased the likelihood of a soft landing, but positioning has remained extremely low, according to the brokerage.

According to the analysts, the energy industry is currently selling at a significant discount and presents a good investment opportunity.

The firm is also optimistic about China as COVID-19 regulations loosen and fiscal stimulus increases, increasing wagers on risky assets.

Inflation is currently running at more than four times the European Central Bank’s 2% objective, according to surveys from last week, which indicate that Europe is almost surely entering a recession. Consumers are remaining cautious about spending due to the worsening cost of living crisis and the bleak future. View More

However, JP Morgan stated that it was anticipating action from European governments to protect consumers from stinging energy inflation as natural gas prices soar as a result of supply disruption caused by sanctions-hit Russia.

According to JP Morgan, corporate profits in Europe are also “defying economic momentum.”A sign of relief for Americans who have watched inflation approach levels not seen in four decades was provided by the US Labor Department’s data released last month, which showed consumer prices did not increase in July due to a dramatic decline in the price of gasoline.