Massive capital demands from tech and governments will strain bond markets unless yields increase, warns Mohamed El-Erian.
Bond markets face growing pressure to raise yields as demand for funding from tech platforms, governments, and corporations outstrips supply at current rates. Allianz chief economic advisor Mohamed El-Erian warned that traditional funding sources, including Middle Eastern capital, are becoming constrained, increasing costs for AI and tech investments.
Recent shifts in investor behavior reflect tighter conditions, with a move toward a ‘venture capitalist mindset’ favoring selective, high-cost opportunities. The mismatch between supply and demand at existing yields could limit capital availability for large-scale projects.
The trend suggests higher borrowing costs ahead as markets adjust to elevated funding needs, particularly in AI and technology sectors.