(Bloomberg) — JPMorgan Asset Management’s Bob Michele has some advice for Treasury Secretary Scott Bessent: get rid of the 20-year bond.
“Nobody likes it,” Michele, the firm’s global head of fixed income, said ahead of the Treasury’s announcement of its quarterly debt sales on Wednesday. “Why do you issue it? It made sense in another era. It doesn’t make sense now.”
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The move reversed about half of its 12-basis-point drop on Nov. 5, when the Nasdaq 100 index suffered its biggest slide since March 2020.
The U.S. midterm elections sparked declines for shares of large U.S. technology companies and oil prices that fueled gains for U.S. government bonds, sending yields to the lowest levels since early September.
The Treasury market last month notched its biggest gain in more than two years as investors lost faith in the sustainability of capital spending on artificial-intelligence infrastructure.
A shift in Wednesday's announcement could pave the way for potential cuts in 2027 to sales of the longest-dated debt, balanced by bigger auctions of bills and shorter-term notes.
A split Congress has often been a bullish recipe for Treasuries. Benchmark 10-year yields have been lower on average one and 12 months after midterms that produced such a result.
