Pacific Investment Management Co. President Christian Stracke says surging capital demand from hyperscalers and the AI ecosystem, not inflation fears, is pushing real rates and bond yields higher. In a Bloomberg TV interview with Paul Allen, he cited Micron Technology Inc.’s revised capex estimates as evidence of a once‑in‑a‑generation tech disruption. Stracke noted that break‑even inflation expectations from TIPS have held near 2.3% all year, reflecting market confidence in the Fed’s credibility. He also highlighted a broader deleveraging trend, with carry trades unwinding amid rising risk and uncertainty ahead of the U.S. mid‑term elections, the U.S.-Iran conflict, and higher funding costs. A global debt selloff has driven France’s 10‑year yield up more than one percentage point since June, its worst quarterly performance since the euro’s inception.
Stracke warned investors to monitor core risk signals, such as widening European sovereign spreads, as the deleveraging continues. The article underscores the growing influence of AI‑related firms on capital markets and the potential for further volatility in bond yields.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing