JPMorgan's James Sullivan sees ‘significantly higher coupons' as debt supply surges

• Surging global government and corporate debt issuance is driving bond yields to multi-decade highs, making bonds more attractive than equities.
• The US Treasury's buyback operation, exchanging longer-duration bonds for shorter-duration bills, is likened to 'paying your mortgage with a credit card,' indicating a temporary solution to a supply-demand mismatch.
• Stablecoin funds are becoming significant incremental buyers of US Treasuries, acting as a 'US dollar supportive' force.
• Over 40% of S&P earnings growth is expected from AI companies, but only 11% of corporate management teams have quantified efficiency or productivity gains, posing a risk if these expectations don't materialize.

James Sullivan of JPMorgan discusses the surge in global government and corporate debt issuance, leading to significantly higher bond yields and making equities less attractive. He highlights the US Treasury's buyback operation as a temporary fix and warns about market vulnerability due to unquantified AI-driven earnings expectations, despite stablecoins becoming major buyers of US Treasuries.