Speaker · Updated
Bob Michele: latest market views
J.P. Morgan Asset Management
Summary
Bob Michele is Managing Director, Chief Investment Officer and Head of the Global Fixed Income, Currency & Commodities group at J.P. Morgan Asset Management, overseeing more than $700 billion in assets and known for his cautious, credit-focused macro views.
Chorus has 27 views from Bob Michele across 2 episodes on Bloomberg Surveillance and Masters in Business since October 16, 2026.
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AI hyperscaler bond spreads widened 25-30bp while other deals moved only 2-4bp, showing AI-related credit is being priced differently.
Using quarter-to-date yield changes (a small sample), Bob says spreads on AI and related hyperscaler issuance are out 25 to 30 basis points while the rest of the deals are out only 2 to 4 basis points. He says the market is differentiating, but there is still yield-seeking money and heavy supply. Issuers are becoming more sensitive, with some deals scaled back by about $5 billion. Oracle's deal still went fine, roughly 3.5 times oversubscribed, and non-tech AI-related deals were six times oversubscribed.
“when you look at the AI and related, the hyperscalers, you're seeing credit spreads out 25 to 30 basis points. When you look at the rest of the deals, they're out two to four basis points.”at 3:39
Bloomberg Surveillance: Bloomberg Surveillance TV: November 3rd, 2026 ·
AI infrastructure & data centers
About 97GW of data-center power planned for 2028 is at risk if populist pushback grows.
Drawing on Semafor's work, Bob says about 37 gigawatts of power production is coming online next year and is largely under construction. About 97 gigawatts is planned for 2028, and that is what is at risk from the elections if populist pushback on data centers builds. He notes 2028 is still about a year and a half away, so there could be bargaining, and says companies have lots of profits to share with communities.
“there's 37 gigawatts of power production that are coming online next year. That's largely under construction. There's 97 that are planned for 2028. That's what's at risk with the elections.”at 7:15
Bloomberg Surveillance: Bloomberg Surveillance TV: November 3rd, 2026 ·
A Democratic midterm sweep is mixed for bonds: good for Treasuries, but a risk to credit.
Bob says a blue wave is mixed for the bond market. It is good for Treasuries, but it puts credit at risk because a Congress emboldened to antagonize the administration would make fights over Supreme Court and Federal Reserve appointments, and debt ceilings, more controversial, and credit risk dislikes that animosity. He also says a Republican sweep would be the worst case for bonds, because it would bring fiscal spending expectations and renewed fears of borrow-and-spend.
“I think it's mixed for the bond market. I think it's good for treasuries, and I think it puts credit at a bit of risk here because you're going to have a Congress that can be emboldened to antagonize the administration.”at 8:21
Bloomberg Surveillance: Bloomberg Surveillance TV: November 3rd, 2026 ·
Treasury should scrap the 20-year bond; front-end financing is easy and the 20-year is an orphan.
Bob argues the 20-year bond supplies the long end and nobody likes it. It made sense in another era but not now. He would move that supply to the front end, where there is about $8 trillion in money market fund assets and plenty of liquidity, so Treasury can finance itself there with ease. He adds that the Treasury is still buying about $6 billion a month in the long end, so the combination gives nice support to long-end yields.
“Get rid of the twenty year. Nobody likes it. It's supplying the long end... It was an orphan issue. We're going to just dump it into the front end where there's 8,000,000,000,000 in money market fund assets.”at 9:45
Bloomberg Surveillance: Bloomberg Surveillance TV: November 3rd, 2026 ·
Fed funds and the Treasury curve should converge near 4.5%; yields are unlikely to push well above 5%.
After yields rose more than 100 basis points from below 4% to above 5% this year, Bob says the Fed funds rate and the Treasury curve can easily converge around 4.5%, a view JPMorgan put out in September and still holds. He expects fits and starts, with 4.8% as an interesting first level because it is the 100-day moving average and a retracement level. He thinks the days of pushing well above 5% are past for now. He also says the Fed funds rate can get into the mid-4s, which is far above zero but not yet the 5-6% range of this cycle.
“I think we're at a point now where we can easily see the Fed funds rate and the Treasury yield curve converging around 4.5%. We put that out there in September. We still believe it.”at 11:43
Bloomberg Surveillance: Bloomberg Surveillance TV: November 3rd, 2026 ·
Strong Q3 growth will be followed by some Q4 payback as higher rates slow the economy.
Bob says higher rates do cost the economy and help to slow things down. He recognizes that the third quarter was strong, and expects some payback in the fourth quarter. He thinks the market is getting comfortable with the Fed funds rate in the mid-4s, which is still well above zero and above where it was months ago.
“we recognize the third quarter was a strong quarter. There will be some payback in the fourth quarter.”at 12:34
Bloomberg Surveillance: Bloomberg Surveillance TV: November 3rd, 2026 ·
Gold is a reflection of central bank outcomes, not a policy tool, so it cannot serve as a true reserve alternative.
Central banks have been acquiring gold, but it is hard for them to use gold to manage and deliver on their primary objective of price stability. Gold mainly reflects the results of their policies rather than letting them change those policies. Bob also questions why economic growth should depend on how much metal is mined each year. He therefore sees gold as a weak candidate to displace the dollar, even though it was once treated as the anti-dollar hedge.
“It's really hard for them to use gold to manage and deliver on their primary objective, which is price stability, inflation. Gold's more a reflection of the outcome of their policies than allowing them to alter their policies.”at 23:16
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
The dollar is the only reserve currency; no credible alternative exists for the first time in his career.
Official institutions keep asking whether they should diversify away from dollar assets and which alternative reserve currency to use, and for the first time in his career he cannot name one. He walks through the history: the yen was the supposed challenger in the late 1980s and faded; the euro looked like it would match the US but stalled because monetary union without fiscal union did not work; the renminbi was touted after 2009 and also faded. Gold is also a poor substitute because central banks use it as a reflection of their policy outcomes rather than a tool to hit their inflation objective. Nobody is willing to challenge the dollar for now.
“So today, we sit here, and, really, the dollar is the only reserve currency out there. Nobody wants to fight it for now.”at 23:33
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
BitcoinUncertain
Bitcoin is an alternate asset class and store of value, though he doubts it will go mainstream.
He sees Bitcoin as a store of value because a younger generation may want it as one. He compares it to collectibles: a Jackson Pollock sold for about $200 million even though AI and 3D printers can now replicate a Monet almost perfectly, so collectors value originals for reasons beyond replicability. He says it is an alternate asset class and a store of value, and he does not lecture people on what they buy. He is less confident about its wider role: he does not know if crypto can go mainstream or if Bitcoin specifically will, and it would need central banks and Treasuries to join to challenge the dollar.
“I think it... It's an alternate asset class, and I think it is a store of value. And I'm not here to lecture people on what they wanna put their money into.”at 26:03
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
A Treasury- and Fed-backed stablecoin acting as a digital dollar is almost inevitable.
He separates crypto, which may not go mainstream, from stablecoins, which can be tracked and regulated and have the full faith and credit of the US behind them. He expects a digital dollar in the stablecoin form, backed by the Treasury and supported by the Federal Reserve, and calls that almost inevitable. He treats this as a more plausible route to digital money than private cryptocurrencies, and as separate from the question of whether crypto can replace the dollar.
“But I do see a digital dollar in the stablecoin world with the backing of the treasury, the support of the Federal Reserve. To me, that's almost inevitable.”at 26:57
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
Capital will carry a real cost again; the near-zero rates of the past quarter century were aberrational.
He describes a healthy environment with demand for capital because it is put to productive use. That creates competition for capital and a cost for it, and the cost will not be zero. He sees the Fed's 2012 neutral estimate as evidence that rates should return to a higher level. Barry's data show the 2001-2026 decade of about 3.25% 10-year yields was well below the 8% of the prior quarter century. Bob agrees that much of the recent period was aberrational and that the economy is moving back to normal, and he says the post-financial crisis period is behind us.
“And it ain't gonna be zero anymore. It... It's gonna have a real value to it.”at 28:54
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
The Fed's neutral rate is around 4.5%, and rates in a 3-6% range are where policy should sit.
The Fed's first long-run neutral estimate was 4.25%, derived from the roughly 99-year history of real Fed funds rates plus a 2% inflation target. He rejects the idea of a return to 10% and sees 3-6% as the right zone. He says 4.5% is a good benchmark as the economy searches for what normal is, and he views a return to positive real rates as healthy because it reflects a dynamic economy.
“I do think, you know, somewhere in the three to 6% range strikes me as as where the Fed should be. So is it four and a half percent is a neutral point? I think that that's a good bogey to put out there”at 31:28
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
Investment-grade bonds yield above 6% and below-IG near 7%, making fixed-income portfolios attractive to clients.
He values the ability to give businesses and households bond portfolios that yield more than 6% in the investment-grade space. Moving slightly below investment grade gets close to 7%. Barry notes this compares favourably with the roughly 2% yields of the low-rate era. Bob presents the higher yields as the reward for returning to a normal rate environment.
“I like the ability to give our client base businesses and households bond portfolios that have yields above 6% in the investment grade space. And if you take a little below investment grade, you get close to 7%.”at 32:00
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
Warsh's Fed will not break anything, but losing the Fed's model and minutes transparency would be a mistake.
He expects new Chair Warsh to reorganise the Fed as he sees fit and says the Fed is not going to break anything, so the market will adapt, as it did from Volcker to Greenspan. He thinks the previous central banks had reached a good level of transparency: they published models, minutes and publications, which let the industry give feedback. He argues that this feedback loop was valuable, and he does not understand why central banks would want to move away from it. He notes the Fed's rate-cut forecasts this year did not materialise, but that the guidance still gave an early feedback loop.
“What they were doing is pretty much activating millions of people in the industry to focus on the issues they were concerned about and get all that feedback... I don't know why central banks would wanna get away from that.”at 34:14
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
The Fed will prioritise inflation vigilance over growth, as a large new demographic cohort raises spending and inflation.
After the financial crisis central banks focused on growth. He expects the Fed under the new chair to be more vigilant on inflation than growth. The 1991 birth cohort is now the largest population group and will become the dominant earner, spender and saver. That shift adds growth and inflation pressure, so rates will be well above zero. He argues central banks will need to be more focused on inflation vigilance, and says the Fed is catching on.
“I expect this Fed to be more vigilant on inflation than growth. I think the central banks and the Fed that were more vigilant on growth had to be after the great financial crisis.”at 34:33
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
AI is bigger than the dotcom era and possibly the industrial revolution, with transformative long-term potential.
JPMorgan's asset management and bank saw and believed in AI early, about three years before the buildout. Bob says AI is greater than anything in the dotcom era and may compare to the industrial revolution. He draws an analogy to the internet: if a smartphone-level product had existed in 2000, the dotcom bubble would have been far bigger. He admits nobody knows what AI will do five or ten years out, but says he is excited about what it could do five years from now. Today it is already changing how the bank operates.
“It's greater than anything that happened in the .com era. You have to go back to the industrial revolution.”at 42:20
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
AI infrastructure & data centers
Hyperscaler capacity demand far outstrips supply, creating a seismic financing need that JPMorgan can serve.
JPMorgan invests in all the hyperscalers across the capital structure, in both asset management and banking, and sees the same picture across its business. Demand for AI is very high while the ability to deliver capacity is very low. Hyperscalers can borrow today on pristine balance sheets to build capacity quickly and monetize demand, or fund it from excess cash flow, which most of them have. Not building fast enough risks becoming the next BlackBerry or Nokia. This makes the financing need seismic, and JPMorgan offers bank lines, direct loans, public debt in multiple currencies, and equity options. Bob describes JPMorgan as only a sliver of the solution because the borrowers are having many other conversations.
“Demand is super high. The ability to deliver capacity to meet that demand is super low.”at 43:59
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
Nonbank private credit is a legitimate lending channel, and public-private convergence is healthy for bond markets.
Bob sees private credit as a legitimate nonbank lending channel that banks can accept, as mortgages showed when banks originated loans and sold them to nonbank lenders such as Rocket Mortgage. Banks and nonbanks now coexist there. Large borrowers now weigh public debt markets against direct loans. JPMorgan's commercial bank, the largest lender to corporate America, sources and originates loans. Its asset management group then does a fiduciary review and places suitable loans in client portfolios. He says the convergence of public and private markets is happening everywhere and is healthy for bond markets.
“I love it. I love the fact that a legitimate nonbank lending channel has been opened up.”at 48:04
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
Deficits are one of many yield drivers; US debt service near mid-3% of GDP still looks reasonable.
Bob sees deficits as one of several factors pushing yields higher, not the dominant one. He argues governments, including in France and soon Germany, have lost the spending discipline households show. Japan's debt is near 300% of GDP, China's near 200%, and the US is just over 100%. Debt-to-GDP is less informative than debt service to GDP. US debt service is around 5%, the historic high, but it is in the mid-threes now, which he calls still reasonable. Much of the government's borrowing was done at low coupons.
“Perhaps a more interesting measure is to look at debt service to GDP... we're in the mid threes right now. To me, that's still pretty reasonable.”at 51:33
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
US Treasuries are not the best global bonds; yields are extreme elsewhere, notably Australia and Japan.
Bob pushes back on the 'sell America' narrative but says the US does not own the best bonds in the global market, though it has some of them. Yields have repriced to extreme levels in several places over the past year, recently including Australia and Japan. He likes markets where the central bank is disciplined and willing to tighten to rein in inflation, rather than leaving policy so accommodative that it finances higher energy prices passing through to inflation. Other good borrowers exist, so investors should not default to Treasuries.
“The US doesn't own the best bonds in the global bond market. It has some of them, but not all of them.”at 52:52
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
EM central banks are as good as developed-market peers, and were even sharper hiking from 2021.
Bob says the authorities in EM countries are doing a great job, and the central banks are every bit as good as those in developed markets. He argues that EM central banks began hiking in 2021 a year before developed-market central banks, so they were arguably a little sharper. He links this to the strong local-currency EM debt market, where he sees the central banks as credible and disciplined.
“The central banks are doing a fantastic job. They're every bit as good as the developed market central banks... they're actually a little bit sharper.”at 55:10
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
Local-currency emerging market debt is the hidden gem, with about 5% real and 9% nominal yield.
EM local debt is now financed domestically, with full yield curves. Pension funds and insurers support the long end, and wealth platforms support the front and intermediate parts. About 90% is owned by locals, so it does not depend on cross-border flows. The basket JPMorgan built has a real yield near 5% and a nominal yield near 9%. JPMorgan owns Mexico, Colombia, Brazil, and Czech and Polish bonds, and bought a new South African issue near a 10% yield. Bob also cites EM central banks as sharp, which he sees as supporting the asset class.
“So that's the hidden gem in our portfolios today is local emerging market debt.”at 55:33
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
Higher real yields reflect policy-mix and geopolitical uncertainty, not inflation fears; TIPS real yield is 2.9%.
TIPS show inflation expectations well anchored at about 2.35%, even with oil second- and third-round effects. What has become unanchored is the real yield, at 2.9%, which is high enough that you have to go back to the dotcom era to find it. Bob says bond markets are pricing less concern about inflation or central banks' ability to handle it, and more concern about the mix of policies. Monetary reaction functions are unclear, fiscal borrowing is heavy and not well understood, and geopolitics (the Middle East, Russia and Ukraine) and elections (France, US midterms) add uncertainty. Investors are demanding compensation for that, which shows up in higher real yields.
“What's become a little bit unanchored is the real yield embedded within tips. That's at 2.9%. You have to go back to the .com era to find real yields that high.”at 57:32
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
Municipal bonds are attractive; tax-loss selling has created a buying opportunity in munis.
Munis have a high yield, and Barry notes a New York combination muni yields close to 5%, a taxable equivalent above 8% for high-tax states. Bob says the market has come under pressure from the backup in yields and heavy supply, but he thinks that has gone too far. Ahead of year end, munis are being sold for tax-loss harvesting, which he says has created a good buying opportunity. Munis' rainy day funds are flush again after COVID payouts, after they were depleted a decade ago. JPMorgan is buying.
“Them. Love them. Absolutely love them. Exactly for what you say, the yield is there. It's high.”at 59:14
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
A broad capex cycle beyond AI, plus solid global profits, underpins the economy's resilience.
Bob sees the economy as resilient because of a capex cycle. Businesses are investing, and while AI is the centre of attention, sovereign borrowers talk about spending on technology, defense, border security, and energy independence. Manufacturing and supply-chain investment is rising after tariffs. He says capex is more broadly based than just AI. Corporate earnings and profitability look pretty good, and they also look good globally. JPMorgan's economic outlook puts the probability of expansion in Q4 2026 at 85%.
“One is the CapEx cycle. When we talk to businesses, they are investing... we see CapEx as being more broadly based than simply AI.”at 1:01:26
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
With no fiscal stimulus in the last 18 months of Trump's term, a hard landing is a real possibility.
Bob thinks Republicans are unlikely to keep Congress, so a split Congress and administration could be the outcome. The One Big Beautiful Bill has come and gone. If higher energy prices and tariffs remain with no stimulus, and Congress cannot deliver more, the economy could see a soft landing or a harder one. The US has not had a recession in seven years. Barry notes it has been closer to 17 years since the GFC, excluding COVID, and the economy has been resilient. Bob says the next decade looks pretty good but will not be a straight line.
“...there's nothing that will provide the stimulus and congress is unable to deliver it, do we have a soft landing or is it something that's a little bit harder?”at 1:06:15
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
New graduates' native AI fluency gives them a career edge, as VisiCalc once did for spreadsheets.
Bob says recent graduates have a technology advantage because AI is a way of life for them, while senior professionals are still on legacy systems. He recalls how, when he started at Bankers Trust in 1981, VisiCalc let him analyze dozens of companies at once instead of one a day, which changed his career. He says candidates interviewing for JPMorgan's platform who are in college already show how AI-enabled they are, and the firm can teach them the finance.
“You have a technology advantage coming out of university because it's a way of life. And those of us who have been in business for a while are generally still on legacy systems.”at 1:16:03
Masters in Business: Financing In The AI Boom: Masters in Business with Bob Michele ·
Shows
- Bloomberg Surveillance · 1 episode
- Masters in Business · 1 episode
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