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2026-05-20 18:01:12
[AI Frenzy Rewrites Bond Market Logic: $7.6 Trillion in Capital Expenditure Pushes Up Long-Term Yields] ⑴ While some are puzzled by the simultaneous occurrence of the AI boom and rising borrowing costs, the two are closely related. Beyond the AI investment frenzy, soaring long-term productivity is pushing up forecasts for neutral interest rates. ⑵ Goldman Sachs estimates AI capital expenditure will reach $7.6 trillion over the next five years, potentially a larger driver of bonds and stocks, forcing investment institutions to reassess the long-term impact of AI on the macroeconomy. ⑶ The Institute of International Finance states that a successful AI cycle should push up neutral interest rates because higher expected returns and stronger capital formation will increase the level of expected investment relative to savings. The market should not expect a return to the extremely low real interest rate environment of the 2010s based on the current AI boom. ⑷ Barclays' annual research reached a similar conclusion, stating that rising productivity coupled with huge capital expenditure demands points to higher neutral real interest rates, and the long-term bond market may finally be repricing. (5) With a massive investment boom underway and inflation-adjusted central bank policy rates turning negative, coupled with rising long-term neutral interest rate forecasts, policymakers face the risk of falling behind in tightening monetary policy. The bond market may be anticipating these policy adjustments. (6) TS Lombard economists point out that the wage-to-GDP ratio is closely related to neutral interest rate forecasts. If the labor share continues to decline, all discussions about structurally higher bond yields may be flawed. (7) Barclays believes that AI coupled with humanoid robots could accelerate automation, further shifting national income distribution from labor to capital. The electricity and commodities needed to build and maintain the AI and robot world may fuel long-term inflationary pressures through energy and raw materials rather than employment and wages. (8) A Bank of America survey this month shows that only 4% of global asset managers expect a hard landing, while over 60% of respondents expect the yield on 30-year US Treasury bonds to break 6% in the next 12 months, indicating that investors are still betting on further growth in the AI boom.
