JPM’s Michele Tells US Treasury ‘Get Rid of the 20-Year’

JPMorgan Asset Management’s global head of fixed income Bob Michele says equity-market weakness could benefit bonds and offers an outlook for bond yields ahead of the U.S. Treasury’s November 2026 quarterly refunding announcement. The article provides no specific yield targets or numerical forecasts.

Analysis

The actionable signal is a conditional correlation call, not a rate forecast: equity stress can support Treasuries when it signals weaker growth and prompts duration demand, but may fail if the shock raises inflation risk, fiscal concern, or Treasury term premium. The refunding announcement matters through the expected mix and size of bill versus coupon financing; absent specifics, the interview supplies no basis for a directional yield target or a change in supply assumptions.

Near term, watch whether equity weakness coincides with lower real yields and tighter rate volatility, rather than treating an equity selloff alone as confirmation of a bond rally. Over the next 1–3 months, auction demand, Treasury guidance, and inflation and labor data can either validate or overwhelm the flight-to-quality channel. Over 6–18 months, persistent deficits or heavier coupon issuance could keep long-end yields elevated even if growth softens, weakening the usual equity-down/Treasury-up hedge. The contrarian risk is that investors overprice the hedge value of duration before the source of equity stress is clear.

Key Decisions for Investors

• No immediate directional duration trade on this commentary alone; it gives neither yield levels nor independently testable new evidence.
• Treat U.S. Treasury duration as a conditional hedge if an equity drawdown is accompanied by falling real yields and no renewed inflation or term-premium pressure. Reassess if long-end yields rise through the selloff or auction demand deteriorates.
• Ahead of the refunding announcement, monitor coupon-versus-bill financing guidance, auction results, and term-premium measures. A greater-than-expected coupon supply signal would challenge the long-duration thesis; do not infer it from the interview.
• For the next 1–3 months, track the equity/rates correlation alongside inflation and labor releases. If equities fall but inflation compensation or real yields rise, the proposed bond-market benefit is not materializing and duration should not be relied on as the hedge.