JPMorgan Chase prepares to offer zero-coupon CDs linked to European and U.S. equities indexes

By Sheri Kasprzak

New York, Oct. 7 – Amidst some substantial volatility out of Europe – and ahead of an earnings season that is already negatively impacting U.S. stocks, JPMorgan Chase Bank, NA announced plans to offer zero-coupon certificates of deposit linked to a European equities index and a U.S. equities index.

The investment bank will offer CDs linked to the J.P. Morgan TargetTracker: European Equities 20/8 (EUR) index, as well as the J.P. Morgan TargetTracker: U.S. Equities 18/6 (USD) index, according to a term sheet.

Index return must be positive

For both CDs, the index return must be positive. For the European index-linked CDs, the investors will receive par plus at least 130% of the index return at maturity, which is Oct. 29, 2021. The U.S. index-linked CDs are also due on Oct. 29, 2021, and payout, assuming a positive return, is at least 105% of the index return.

In both cases, if the index return is negative or flat, investors receive par at maturity.

J.P. Morgan Securities LLC is the agent for the CDs, which are expected to price on Oct. 28.

Europe and U.S. see volatility

This offering comes as Europe has seen some volatility, both politically and economically. The U.S. is also coming up on a difficult earnings season.

Barclays’s Global Head of Investment Strategy Hans Olsen wrote in a recent report that the United States and Europe, excluding the United Kingdom, have been Barclays’s preferred equity regions for several years.

“Since 2013, the U.S. and Europe, ex-U.K., have outperformed other developed regions in common currency terms,” Olsen wrote.

Even so, some economic news has left both regions troubled, including some negative economic news from Germany.

“The German IFO business expectations index, a leading indicator for German exports, now points towards a contraction in German export growth,” Olsen recently wrote.

“The good news is that there are other indicators pointing in a different direction. Readings on German output recently rose, remaining firmly in expansionary territory, and offering hope that the principal economic engine on the continent will not slip into recession. Economic indicators outside the euro zone offer additional hope. The ISM manufacturing index in particular points towards an increased level of exports from the euro zone to the U.S.”

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