A strategist at JPMorgan Private Bank said Thursday that rising long-term bond yields may reflect investor expectations of an AI-driven productivity surge rather than inflation or fiscal concerns. Speaking at the Reuters Global Markets Forum, Jacob Manoukian, U.S. head of investment strategy at JPMorgan Private Bank, argued that the bond market could be detecting an emerging productivity cycle fueled by current AI investments.
The semiconductor sector, a key beneficiary of AI spending, has corrected more than 20% this year despite strong demand. Manoukian noted that the discount between two-year forward and trailing 12-month price-to-sales multiples for semiconductors has widened to 40%-50%, compared with a typical 20% gap, suggesting valuations remain conservative relative to future earnings potential.
AI-related corporate debt issuance has surged, exceeding $220 billion this year—double last year’s total—as hyperscalers scale up data center and infrastructure spending. U.S. corporate bond issuance has reached $1.68 trillion year-to-date, up nearly 27% from the same period in 2025, reflecting the financing needs of AI-driven expansion.
Some investors warn that the increased supply of corporate debt could reduce demand for U.S. Treasuries, contributing to higher long-term yields. Manoukian added that while peak earnings may be priced in, companies that meet analyst sales forecasts could see material appreciation if the market maintains its valuation of trailing 12-month earnings through 2028.
