JPMorgan Asset Management: U.S. Treasuries Could Return 7%-8% Over the Next 12 Months
nashnova research
JPMorgan Asset Management CIO Bob Michele forecasts 7%-8% total returns on US bonds over the next 12 months, driven by both price appreciation and coupon income, with his team already adding long-duration positions.
Where does 7%-8% come from?
The US Treasury yield curve currently sits near 5%, with the short end slightly below that level. This means → coupon income alone — the fixed interest from holding the bond — already delivers close to 5% annualized.
Michele expects price appreciation on top of that. If yields fall, bond prices rise, adding capital gains to the total return.
In plain terms = one part is interest earned, the other is price gains. Stack both, and you reach 7%-8%.
Why does he favor the long end?
Michele is clearest on one call: he likes long-duration Treasuries — bonds with maturities of ten years or more.
He expects the Fed to hold rates steady this week but to signal a hawkish stance in December, making clear it is "still in a tightening cycle."
This means → the market sees the Fed staying vigilant on inflation, which paradoxically pushes long-end yields lower — investors trust the central bank will not let inflation run, so long-term rate expectations decline and long-bond prices benefit.
Why are Treasuries already rallying?
US bonds have rallied across the curve this month. The benchmark 10-year yield has fallen more than 30 basis points since October, on track to end a seven-month streak of rising yields.
Three risk-off drivers hit at once: an AI-stock selloff, France's political crisis, and Middle East tensions — all funneling global capital into Treasuries.
In plain terms = stocks wobble, Europe flares up, the Middle East stays tense. Money needs somewhere safe, and it piles into US government debt. Bond prices rise.
Has JPMorgan already put money in?
Michele disclosed last month that his team began buying long-duration bonds in the US, Japan, and Australia, calling prices "simply too cheap" and judging the market had reached "maximum pain."
The Bloomberg US Treasury return index is down 0.9% year-to-date in 2026, after three consecutive years of positive returns. This reflects a market still in correction — and Michele is adding exposure right at that low point.
JPMorgan Asset Management oversees roughly $4.6 trillion in assets. When a firm of that scale starts loading up on long bonds, the move itself becomes a market signal.
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