Jacob Manoukian, who leads U.S. investment strategy at JPMorgan Private Bank, told the Reuters Global Markets Forum that the uptick in long-term bond yields may be reflecting investor anticipation of an AI-induced productivity cycle rather than only concerns about inflation or mounting government debt.
Manoukian suggested the bond market could be incorporating expectations that current waves of AI investment will lift productivity. He pointed to the semiconductor industry as a primary beneficiary of that investment, a sector the firm still views positively even after a correction exceeding 20%.
JPMorgan highlights a widening valuation gap within semiconductors: the discount between two-year forward and trailing 12-month price-to-sales multiples has stretched to roughly 40%-50%, versus a typical spread nearer 20%. The firm interprets that widening as the market pricing in weaker future earnings for the sector.
Despite that, Manoukian framed the dislocation as a potential buying opportunity. "We believe that a peak in earnings is already priced in, and we don’t think that earnings have yet peaked. The opportunity for investors is that if some of these companies realize the sales that analysts have already forecasted, they could appreciate materially if the market is still willing to pay the same trailing-twelve-month earnings in 2028."
At the same time, Manoukian noted a marked increase in borrowing tied to AI buildouts. Hyperscalers are taking on more debt as they expand data center and infrastructure spending to support AI workloads. According to the figures cited, AI-related debt issuance has passed $220 billion this year, roughly double the amount issued in the prior year.
The broader U.S. corporate bond market has also seen heavier supply, with corporate issuance totaling $1.68 trillion - an increase of nearly 27% compared with the same period in 2025. Those supply dynamics have coincided with rising Treasury yields, prompting some market participants to suggest that growing corporate debt could dampen demand for U.S. government bonds.
Market data included in the commentary showed the United States 10-Year Treasury ticker US10YT=X up 1.18%, GOVT off 0.31%, SOXX down 3.2% and 0P00015XEP up 0.07%.
Context and implications
Manoukian’s view frames the rise in long-term yields as potentially signaling optimism about productivity gains from AI rather than only macroeconomic stressors. For investors, the combination of stretched valuation spreads in semiconductors and accelerating AI-related capital spending creates a specific set of considerations around timing, earnings expectations and sector allocation.