Bond market cannot meet AI funding demands without higher yields, says Allianz’s El-Erian

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โดย Seeking Alpha·Read original
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The bond market cannot meet the massive funding demands of tech platforms, governments, and corporations without pushing yields higher, according to Mohamed El-Erian, Allianz chief economic advisor. El-Erian pointed to Amazon’s recent bond issuance as evidence of the strain, noting that investors had to sell other holdings just to participate and even then the offering had a lackluster performance. Traditional funding sources are also becoming constrained, particularly from the Middle East, which has historically been a significant backer of tech investments but now faces massive reconstruction needs and a push for greater resilience through infrastructure investments. While El-Erian described himself as a big believer in the transformational ability of AI, he emphasized that the technology will cost a whole lot of money to build out, and with funding sources diminished and capital needs expanding, the only way to balance the equation without a recession is higher yields. He also noted that the era of straight up gains in equity markets has ended as investors adopt a venture capitalist mindset, recognizing that AI investments are more expensive than anticipated and that not every company will succeed.

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Artificial Intelligence▼ · 1 stocks
Amazon.com Inc
AMZN
▼ NegativeCapitalrelevance

Amazon's recent bond issuance had lackluster performance, indicating higher borrowing costs and strained funding conditions.

Financials▲ · 1 stocks
Others▲ · 1 stocks

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