JPMorgan Chase Global Headquarters Building in New York, January 20, 2026.
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JPMorgan says the U.S. government’s efforts to address pressures in the bond market as a surge in global bond issuance tests investor demand may simply be pushing the issue into the future.
James Sullivan, co-head of global fundamentals research at JPMorgan, told CNBC’s “Squawk Box” on Friday that the Treasury Department is effectively buying back long-term debt while issuing short-term bills, a strategy that provides temporary relief but leaves the underlying debt burden intact.
The U.S. Treasury Department, led by Secretary Scott Bessent, announced Wednesday that it will at least double the size of its bond buybacks from September 9 to November 4.
Mr. Sullivan compared the approach to refinancing long-term debt to short-term borrowing.
“It’s a bit like paying your mortgage with a credit card. It might work for a while, but eventually the discrepancies start to become more apparent,” he added.
While this intervention may help control borrowing costs in the short term, Sullivan’s concern is that it will do little to address the larger problem of a growing wall of government and corporate debt that will eventually have to find a buyer.
“The idea of governments trying to control markets is almost always not a particularly attractive proposition.”
This challenge goes beyond the United States, as Mr. Sullivan pointed out that the U.S. government debt is about $40 trillion, and the world’s developed countries as a whole have about $76 trillion in debt, with record amounts of corporate bond issuance.
Sullivan said a significant increase in bond supply is important to the market even if economic fundamentals are strong. Issuing more bonds will require finding buyers, and issuers may need to offer more attractive yields to investors.
“The only way to balance supply and demand is through prices,” he said. The equation is becoming more complicated as some of the traditional buyers of U.S. Treasuries exit.
China’s government bond holdings are at an 18-year low, and the amount held by foreign governments in the U.S. Treasury is at a 14-year low.
The wave of debt is not limited to governments. And as economic growth becomes increasingly capital-intensive, driven by things like artificial intelligence infrastructure, reshoring, and national security investments, companies are taking greater advantage of debt markets.
Big AI companies have issued $200 billion in bonds so far this year, an 80% increase from a year ago, Sullivan said. Spending on data centers and other AI infrastructure is increasing broad competition for capital.
The impact extends to stocks as well. Rising bond yields may make fixed income assets increasingly competitive with equities, especially if equity valuations increase.
Bond yields are now higher than the S&P 500’s earnings yield, according to JPMorgan data, making it more difficult for investors to choose the asset class.
“As this environment evolves, asset allocation decisions will become significantly more complex going forward,” Sullivan said.
