blackrock, the world’s largest asset manager, has signaled a negative outlook on both U.S. long-term government bonds and Japanese government bonds, citing the financial implications of the burgeoning artificial intelligence sector. The firm believes the substantial capital expenditure required for AI progress will drive up bond 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 to invest in AI infrastructure. The shift in sentiment impacts investors globally, perhaps reshaping fixed-income portfolios and influencing broader macroeconomic trends. A sustained rise in bond yields could affect everything from corporate borrowing rates to mortgage costs, with meaningful consequences for economic growth and financial stability.
BlackRock’s view on U.S. bonds is predicated on the expectation that AI investment will necessitate increased government borrowing. The firm anticipates this demand will push yields higher, diminishing the appeal of long-term U.S. Treasury securities.The firm also expressed a negative outlook for Japanese government 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 value of Japanese bonds.
Davide Barbuscia, a macro investment and trading correspondent at Reuters, reported the firm’s positioning. Barbuscia previously covered economics in the Gulf region and has reported on sovereign debt and restructuring situations. He joined Reuters in 2016 after working at Debtwire in London and Johannesburg.
