- The US bond market could return around 7% to 8% over the next 12 months, according to Bob Michele, chief investment officer and head of global fixed income at JPMorgan Asset Management, which manages about $4.6 trillion. “The Treasury curve is close to 5%,” he said at an event in Singapore, with front-end yields a little below that.
- His math combines price gains and income: “The first thing is we expect to see some price appreciation. Then you get the carry on top of that.” With yields near 5%, that implies roughly 2 to 3 percentage points would need to come from price appreciation to reach his range (Lumida calculation).
- Michele sees the most value in the longer end of the curve. He said the Federal Reserve won’t hike this week but will most likely deliver a hawkish message in December, signaling it is still in a hiking cycle, which he expects the long end to welcome because real yields “simply are too high out there.”
- Treasuries have rallied across the board this month: the 10-year yield has fallen more than 30 basis points so far in October and is set to snap a seven-month rising streak. Even so, a Bloomberg gauge of Treasury returns is down 0.9% in 2026, after rising in each of the previous three years.
What Happened?
Michele made the comments at an event in Singapore, saying the US bond market could deliver 7% to 8% over the next year from a mix of price appreciation and carry. Treasuries have rallied this month as a selloff in AI-related shares, the crisis in France and ongoing tensions in the Middle East made US government debt the investment of choice for global investors, Bloomberg reported. Last month, Michele said his team had started buying long-end US, Japanese and Australian bonds, calling prices “simply too cheap” and declaring that markets had reached “a point of maximum pain.”
Why It Matters?
A 7% to 8% forecast from the fixed-income chief of a firm managing about $4.6 trillion is a strong call for bonds after a year in which the Treasury index is still in the red. His view that a hawkish Fed would help the long end, because the market wants the central bank to stay vigilant on growth and inflation, is a contrarian take on how rate signals feed through the curve. If he is right, investors who extend duration now would capture both today’s near-5% yields and capital gains, which matters for bond funds, long-duration ETFs and any equities that are valued off long-term rates.
What’s Next?
The immediate test is this week’s Fed meeting, which Michele expects to end without a hike, and then the December meeting, where he sees a hawkish message that the Fed is still in a hiking cycle. Investors will watch whether the 10-year yield holds its October decline and snaps its seven-month rising streak, and whether the Treasury index can recover its 0.9% loss for the year. Shifts in the drivers of this month’s rally, including AI-related share moves, France and the Middle East, could also change demand for long-dated Treasuries.
Affected Tickers and Coins: JPM, TLT
Source: Bloomberg
