blackrock, the world’s โขlargest asset โmanager, has signaledโ a negativeโ outlook โon both U.S. โฃlong-term government bonds and Japanese government โbonds, citing the financial implications of the burgeoning โขartificial intelligence sector. The firm believes the โsubstantial capital expenditure โrequired for AI progressโ will drive up โbond yields, making these fixed-income assets less attractive.
This bearish stance from BlackRock reflects a broader market anticipation of increased borrowing costs as companies race โto invest in AI infrastructure. The shift in sentiment impactsโ investors globally, perhaps reshaping fixed-income portfolios and influencing broader macroeconomic trends.โ A sustained rise in bond yields could affect everything from corporate borrowing rates to mortgage costs, โคwith meaningful consequences for economic growth and financial stability.
BlackRock’s view onโ U.S. bonds is predicated on the expectation that AI investment will necessitate increased government borrowing. The firm anticipates thisโฃ demandโค will push yields higher, diminishing the appeal ofโฃ long-term โU.S. Treasury securities.The firm โalso expressed aโข negative โขoutlook for Japanese โฃgovernment bonds, despite the Bank of Japan’s continued ultra-loose monetary policy. BlackRock analysts suggest that even with the central bank’s yield curve control, the potential for rising global yields and domestic inflationary pressures could erode the โvalue of Japaneseโค bonds.
Davide Barbuscia, a macro investment and trading correspondent at Reuters, reported the firm’s positioning. โขBarbuscia previously covered economics in the Gulf region and has reported โon sovereign โdebt and restructuring situations. He joined Reuters in 2016 after working at Debtwire in London โand Johannesburg.