JPMorgan: Inflation Concerns Exaggerated, US Treasury Yields Unlikely to Rise in Second Half
Alina Collins
JPMorgan's global strategy team argues the recent rise in Treasury yields is unlikely to persist into H2, calling stagflation risks overpriced — slowing wages and weakening corporate pricing power should cap inflation well below what markets currently expect.
Why does JPMorgan say stagflation fears are overdone?
The market's biggest worry right now is "stagflation" — growth slowing while prices keep rising, a worst-of-both-worlds scenario. JPMorgan says this fear is overblown.
Two core reasons: wage growth is decelerating, and companies are losing pricing power. This means → even if some prices are still rising, overall inflation pressure will land below where the market currently prices it.
In plain terms = the fuel for higher prices is running out — workers aren't earning more, firms can't raise prices freely, so inflation struggles to push higher.
How does AI anxiety actually hold inflation down?
JPMorgan flags an easy-to-miss factor: fear of AI replacing jobs is weighing on labor-market sentiment broadly.
This means → when workers worry about being replaced by AI, their bargaining power drops, and that further weakens wage growth.
This reflects a counterintuitive feedback loop: AI job threat → workers don't push for raises → wages stall → one fewer engine driving inflation.
Where does JPMorgan see yields heading?
The bank's core call: government bond yields will stabilize, not keep climbing.
The recent yield spike after a geopolitical conflict flare-up is, in JPMorgan's words, a "temporary phenomenon" — not the start of a new upward trend.
In plain terms = the yield jump was a fear reflex, not a trend shift.
Where do Treasury yields sit right now?
As of the latest data cited: 2-year at 4.04%, 5-year at 4.16%, 10-year at 4.45%, 20-year at 4.97%, 30-year at 4.98%.
This means → the long end (20- and 30-year) is knocking on the 5% door, while the short end sits noticeably lower — a normal "longer maturity, higher yield" curve shape.
JPMorgan's logic: with inflation pressure actually easing, these yield levels lack the fundamental support for a further significant move higher.
Content is for reference only, not financial advice.