Pimco Says Treasury Yields Track Fed Bets, Not AI Borrowing for Now
Updated
Updated · Bloomberg · Jun 2
Pimco Says Treasury Yields Track Fed Bets, Not AI Borrowing for Now
7 articles · Updated · Bloomberg · Jun 2
Pimco said the recent rise in long-dated Treasury yields is being driven mainly by shifting Federal Reserve expectations, not by artificial-intelligence financing demand.
Lotfi Karoui, Pimco’s multi-asset credit strategist, wrote that claims linking the move in yields to AI-related borrowing are overstated at this stage.
Debt-funded AI investment could still raise risk premia over time by increasing the extra return investors demand for longer-dated or riskier assets.
That effect is likely to emerge over years rather than in the current market move, leaving Fed-rate bets as the dominant near-term force.
Will the massive AI infrastructure build-out permanently alter the fundamental drivers of the global economy and interest rates?
With AI debt soaring to trillions, are bond investors ignoring the hidden risks of a new tech bubble?