Morgan Asset Management said that the recent surge in global bond yields is not simply due to concerns about the Federal Reserve and US fiscal policies. Optimistic expectations of growth brought about by artificial intelligence are prompting investors to re-evaluate what level long-term interest rates should be at. Kerry Craig, global market strategist at Morgan Asset Management in Melbourne, said: “The market is responding to some signals released by the White House and the US Treasury, including lower-than-expected treasury repurchase operations, and discussions on policies that may further increase fiscal pressure.” However, he added, “It is worth noting that demand for treasury bond tenders has also been quite strong recently.” Craig said, “The rise in yield in recent weeks is still largely in line with the logic that nominal economic growth is stronger, real interest rates remain high, and the market is re-evaluating a reasonable center for long-term interest rates. The equilibrium level of long-term interest rates may need to be raised against the backdrop of expectations of increased productivity and large-scale investment requirements, including capital expenditure related to artificial intelligence.”

Morgan Asset Management said that the recent surge in global bond yields is not simply due to concerns about the Federal Reserve and US fiscal policies. Optimistic expectations of growth brought about by artificial intelligence are prompting investors to re-evaluate what level long-term interest rates should be at. Kerry Craig, global market strategist at Morgan Asset Management in Melbourne, said: “The market is responding to some signals released by the White House and the US Treasury, including lower-than-expected treasury repurchase operations, and discussions on policies that may further increase fiscal pressure.” However, he added, “It is worth noting that demand for treasury bond tenders has also been quite strong recently.” Craig said, “The rise in yield in recent weeks is still largely in line with the logic that nominal economic growth is stronger, real interest rates remain high, and the market is re-evaluating a reasonable center for long-term interest rates. The equilibrium level of long-term interest rates may need to be raised against the backdrop of expectations of increased productivity and large-scale investment requirements, including capital expenditure related to artificial intelligence.”