Investors have poured into growth stocks of late, but as recession fears mount, market watchers are weighing whether to rotate into safer bets instead. JPMorgan , however, believes the growth rally still has “further to go.” “We continue to think the rebound in growth style is only tactical, but it likely has some further to go, perhaps even until year end,” JPMorgan’s strategists, led by Mislav Matejka, said in a Aug. 15 research note. Matejka noted that growth stocks have outperformed their value counterparts in the U.S and Europe by 14% and 11%, respectively, since their June lows. In particular, the tech sector stands out for its strong performance after a massive sell-off in the first half of the year. The tech-heavy Nasdaq Composite dropped on Friday, ending down 2% but is up nearly 20% from its June lows. A number of stocks in JPMorgan’s basket of “growth opportunities” are up 50% or more over the past 2-3 months, the bank said. ‘Big catalysts’ The analysts pointed to the peaking of bond yields in June as “one of the big catalysts” for the rebound in growth stocks. While yields have been “recently trying to firm up again,” JPMorgan expects bond yield movements to remain “constrained” in the near term, given continued soft economic activity. Read more Top tech investor reveals why he thinks PayPal is a buy Have markets hit the bottom? Strategist reveals the indicators to watch closely as stocks rally Goldman Sachs says planned energy transition is driving stocks, picks its ‘best-in-class’ names Growth firms, which typically appeal to investors for their future cash flows, benefit from lower yields on longer-dated U.S. government securities such as the 10-year U.S Treasury — often used to calculate the present value of future cash flows. The yield on the benchmark 10-year Treasury note remains below 3% after topping 3.48% in mid-June. The 2-year Treasury rate , which is more sensitive to U.S. monetary policy changes, now sits at 3.273%. This implies a yield-curve inversion — when shorter-term government bonds have higher yields than longer-term ones despite carrying lower risk. This is often viewed by markets as a sign of a looming recession. When to rotate into value “The US 10Y-2Y yield curve is outright inverted at present, having been flattening steadily. We think that one should not switch back into value before the yield curve starts re-steepening,” Matejka said. A bottoming of economic activity momentum is also a prerequisite for value stocks to bounce, JPMorgan said, while stronger economic data — which is not expected until the fourth quarter — and a weaker U.S dollar will benefit more value-driven sectors. “We think that the tactical rebound in growth style has some more legs, as bond yields are likely to stay stuck near term, but the call is still tactical. At some point towards year end, we are looking to get conditions right for a renewed leadership of Value, and this time in a generally robust broader equity market,” Matejka said.