{"id":11335,"date":"2026-08-16T13:57:41","date_gmt":"2026-08-16T13:57:41","guid":{"rendered":"https:\/\/paksouch.com\/?p=11335"},"modified":"2026-08-16T13:57:41","modified_gmt":"2026-08-16T13:57:41","slug":"ai-driven-surge-in-bond-yields-could-be-next-risk-for-markets-and-growth","status":"publish","type":"post","link":"https:\/\/paksouch.com\/?p=11335","title":{"rendered":"AI-driven surge in bond yields could be next risk for markets and growth"},"content":{"rendered":"\n

LONDON: Market gauges of inflation-adjusted borrowing costs have shot to their highest in more than a decade across major economies as AI companies and \u200bgovernments ramp up bond sales, raising risks for stock markets and the world economy.<\/strong><\/p>\n\n\n\n

Real yields are the returns that a bond investor demands above inflation and \u200care an important indicator of true borrowing costs for governments and companies. They are typically determined by expectations about growth, interest rates and the supply and demand of money.<\/p>\n\n\n\n

U.S. 30-year real yields , as measured by inflation-linked bonds, are near 18-year highs at around 3%, while British and German 10-year real yields are trading at around their highest in more than a decade.<\/p>\n\n\n\n

Investors and analysts say a surge in borrowing by AI \u201chyperscalers\u201d, at a \u200btime when governments are still spending heavily, has been a leading factor pushing up yields, as buyers demand higher returns to keep purchasing the flood of bonds hitting \u200bmarkets.<\/p>\n\n\n\n

With inflation expectations broadly steady despite the Iran war, the rise in real yields has pushed up nominal yields around the world in recent \u2060months.<\/p>\n\n\n\n

The U.S. on Thursday paid the highest borrowing cost on a 30-year bond at auction since 2001, at 5.22% .<\/p>\n\n\n\n

BOND FLOOD<\/h2>\n\n\n\n

The likes of Alphabet, Amazon, and Meta have issued almost $220 billion of \u200bbonds so far this year, already more than double the $108 billion for the whole of 2025, LSEG data shows.<\/p>\n\n\n\n

\u201cThere\u2019s a competition for capital which is relatively unprecedented in recent times,\u201d said Vivek \u200bPaul, UK chief investment strategist at the BlackRock Investment Institute.<\/p>\n\n\n\n

\u201cBecause of things like the AI build-out ramping ever up, that capital scarcity dynamic is accelerating and you\u2019re seeing that play out in bond yields.\u201d<\/p>\n\n\n\n

Governments also continue to borrow heavily. The U.S. budget deficit is set to run at around 6% of GDP, or $1.9 trillion, this year, France\u2019s at 5% and Britain\u2019s at 4%.<\/p>\n\n\n\n

\u201cIn Europe defence spending, energy security and infrastructure investment are more \u200bimportant drivers than AI spending specifically,\u201d said Al Cattermole, senior fixed income portfolio manager at Mirabaud Asset Management.<\/p>\n\n\n\n

Markets are also pricing in rate hikes, which all else equal tend to \u200bpush up real yields.<\/p>\n\n\n\n

Max Kitson, a European rates strategist at Barclays, said relatively strong economic growth, particularly in the United States, was an important factor. He also noted that central banks are no longer buying bonds, something \u200cwhich had \u2060suppressed yields.<\/p>\n\n\n\n

WATCH OUT STOCKS<\/h2>\n\n\n\n

Real yields are a benchmark for the inflation-adjusted borrowing costs faced by governments and companies.<\/p>\n\n\n\n

If a bond pays a nominal yield of 3% and inflation is expected to be 2%, its real yield is about 1%. Sometimes inflation expectations are the main drivers of nominal yields, but recently real yields have been more important, analysts say.<\/p>\n\n\n\n

Theoretically, higher real yields should reduce the relative appeal of stocks. Investors can get better inflation-adjusted returns on bonds, while future cash flows, the present value of which are calculated using yields, look less attractive.<\/p>\n\n\n\n

So far, stocks \u200bhitting record highs amid blockbuster corporate earnings and \u200bresilient economies have shaken off the worries.<\/p>\n\n\n\n

JPMorgan \u2060has increased its earnings forecasts for the U.S. S&P 500, while LSEG I\/B\/E\/S data showed profits at European blue-chip companies are set to grow at their fastest rate since late 2022.<\/p>\n\n\n\n

Matt King, founder of Satori Insights, was less sanguine, saying that major tech companies are burning through their cash \u200band will increasingly turn to credit, at which point the rise in real rates will start to bite.<\/p>\n\n\n\n

\u201cWe expect real yields to \u200bcontinue rising until they \u2060choke off the borrowing which has been driving them \u2013 and the rotation into risk which has been fuelling the equity rally,\u201d he said in a note.<\/p>\n\n\n\n

Higher inflation-adjusted borrowing costs can also, at a certain point, cause companies and households to cut consumption and investment, slowing growth.<\/p>\n\n\n\n

Ashok Bhatia, chief investment officer at Neuberger, said U.S. real yields were still below the 3%-4% where he estimated an impact \u2060on economic growth.<\/p>\n\n\n\n

\u201cBut \u200btoday\u2019s level is a warning sign that growth, while currently solid at 1.5% to 2%, could start to \u200bbe threatened.\u201d<\/p>\n\n\n\n

Bhatia said he was cautious about longer-dated bonds given concerns about fiscal policy while Barclays\u2019 Kitson said real yields could continue to climb as there is a lack of appetite among politicians to reduce budget deficits.<\/p>\n\n\n\n

\u201cThe structural \u200bfactors underpinning these increases in yields are still there,\u201d he said. \u201cThere\u2019s no reason to think they\u2019re going away anytime soon,\u201d Kitson said.<\/p>\n","protected":false},"excerpt":{"rendered":"

LONDON: Market gauges of inflation-adjusted borrowing costs have shot to their highest in more than a decade across major economies as AI companies and \u200bgovernments..<\/p>\n","protected":false},"author":1,"featured_media":11336,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":["post-11335","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-scince-tech"],"featured_image_urls":{"full":["https:\/\/paksouch.com\/wp-content\/uploads\/2026\/08\/Pak-Souch-Social-Media-Poster-22-5.png",800,947,false],"thumbnail":["https:\/\/paksouch.com\/wp-content\/uploads\/2026\/08\/Pak-Souch-Social-Media-Poster-22-5-150x150.png",150,150,true],"medium":["https:\/\/paksouch.com\/wp-content\/uploads\/2026\/08\/Pak-Souch-Social-Media-Poster-22-5-253x300.png",253,300,true],"medium_large":["https:\/\/paksouch.com\/wp-content\/uploads\/2026\/08\/Pak-Souch-Social-Media-Poster-22-5-768x909.png",768,909,true],"large":["https:\/\/paksouch.com\/wp-content\/uploads\/2026\/08\/Pak-Souch-Social-Media-Poster-22-5.png",800,947,false],"1536x1536":["https:\/\/paksouch.com\/wp-content\/uploads\/2026\/08\/Pak-Souch-Social-Media-Poster-22-5.png",800,947,false],"2048x2048":["https:\/\/paksouch.com\/wp-content\/uploads\/2026\/08\/Pak-Souch-Social-Media-Poster-22-5.png",800,947,false]},"author_info":{"info":["admin"]},"category_info":"scince & tech<\/a>","tag_info":"scince & tech","comment_count":"0","_links":{"self":[{"href":"https:\/\/paksouch.com\/index.php?rest_route=\/wp\/v2\/posts\/11335","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/paksouch.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/paksouch.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/paksouch.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/paksouch.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11335"}],"version-history":[{"count":1,"href":"https:\/\/paksouch.com\/index.php?rest_route=\/wp\/v2\/posts\/11335\/revisions"}],"predecessor-version":[{"id":11337,"href":"https:\/\/paksouch.com\/index.php?rest_route=\/wp\/v2\/posts\/11335\/revisions\/11337"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/paksouch.com\/index.php?rest_route=\/wp\/v2\/media\/11336"}],"wp:attachment":[{"href":"https:\/\/paksouch.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11335"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/paksouch.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11335"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/paksouch.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11335"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}