JPMorgan strategist sees AI productivity boom behind bond yield rise

Jacob Manoukian, head of investment strategy at JPMorgan Private Bank, suggests that the rise in long-term bond yields could be attributed to expectations of productivity gains driven by artificial intelligence, rather than just inflation or rising government debt. During a recent presentation at the Reuters Global Markets Forum, Manoukian argued that the bond market may be recognizing a positive productivity cycle stemming from current AI investments.

Despite a 20% correction in the semiconductors sector, which is a key beneficiary of AI investment, JPMorgan remains optimistic about the industry. The discount between forward and trailing 12-month price-to-sales multiples for semiconductors has widened to 40-50%, compared to the usual 20%, signaling that investors are factoring in weaker earnings. This creates an opportunity for investors, as Manoukian believes that a peak in earnings has already been priced in and that companies may yet exceed analysts' forecasts.

The surge in AI investment is leading to increased borrowing among technology giants, as they expand their data center and infrastructure capabilities. In fact, AI-related debt issuance has surpassed $220 billion this year, more than double the total from last year. Corporate bond issuance in the U.S. has reached $1.68 trillion, a 27% increase from the same period in 2025.

Some investors are concerned that the growing supply of corporate debt could dampen demand for U.S. government bonds. However, Manoukian remains confident in the long-term prospects of the bond market, attributing the yield rise to AI-powered productivity expectations rather than concerns about inflation or government debt.