Bloomberg Surveillance · Sep 28, 2026
With Bob Michele, Managing Director, Chief Investment Officer and Head of Global Fixed Income, Currency and Commodities at J.P. Morgan Asset Management
Bob Michele said the Federal Reserve would need six rate hikes in total, taking its policy rate from 3 5/8% to 5 1/8%, before bond yields above 5% stop being a bargain.
Bonds sold off last week as oil rose and Fed officials turned more hawkish. Michele said the move does not change his view, and his team has more buying still to do.
"We've got plenty of buying yet to do."
Bob Michele, Chief Investment Officer and Head of Global Fixed Income, Currency and Commodities at J.P. Morgan Asset Management, on Bloomberg Surveillance, has invested in bond markets since 1981. He wrote before the show that he likes intermediate and long-term bonds with yields over 5%.
The full segment is covered here so you can skip it.
Here are the 9 calls that matter.
Key Takeaways
Bond yields over 5% are "pretty much a gift" unless the Fed can deliver six hikes in total
The whole yield curve is oversold, and he expects PCE data and the jobs report to calm it
Higher yields and energy prices are already slowing the economy, but he does not expect a recession
He would buy investment-grade credit near 100 basis points over Treasuries and high yield near 300
Treasuries would return about 20% only in a recession, which he calls a tail case
The Fed's real inflation objective is the mid-2s, not 2%, and the economy has done well at that level
A diesel export ban reminds him of Nixon's price controls, which did not work well
1. Why Yields Backed Up
The host asked what went wrong in fixed income. Michele said a couple of things lined up last week.
No Middle East deal, and a hawkish Williams
"One is we got midway through the week and it was clear there wasn't going to be a peace accord yet." — Bob Michele
That pushed oil higher and raised concern about second-round effects, whether higher energy costs pass through to finished goods and services. Then New York Fed President John Williams said more may need to be done, a week after Michele's team had seen Williams as a possible dovish dissent.
"And I think those couple of things caught the market off guard probably there were a couple stops along the way, so we've had the backup." — Bob Michele
