BlackRock Turns Bearish on Long-Term Treasuries Amid AI Funding Surge
The investment giant warns that massive capital requirements for AI infrastructure could keep interest rates elevated and exacerbate global debt.
BlackRock Investment Institute (BII) has shifted to a bearish outlook on long-term Treasuries, warning that the capital demands of the artificial intelligence boom could drive up interest rates. This pivot signals a significant change in the firm's stance on long-term government bonds.
According to BlackRock's 2026 Global Investment Outlook report, the firm has moved to an "underweight" position on long-term Treasuries. BII expects that the massive wave of funding required for AI infrastructure will lead to increased borrowing across both the public and private sectors. The institute explicitly stated that "higher borrowing across public and private sectors is likely to keep upward pressure on interest rates," suggesting that yields will remain elevated as the world builds out the necessary hardware and energy systems for AI.
The Infrastructure Burden
This shift comes as the global economy navigates a precarious balance of record-level government debt and a period of sustained high interest rates. Simultaneously, the tech industry is engaged in an unprecedented investment cycle. The transition to AI-driven computing requires immense capital expenditures, specifically for the construction of massive data centers, the procurement of advanced semiconductors, and the expansion of energy infrastructure to power these systems.
Market Implications
The potential for a "collision" between existing debt levels and new AI-driven borrowing creates a systemic risk for the bond market. If the AI boom forces significant new borrowing while national debts are already at historic highs, interest rates may remain elevated longer than current market expectations suggest. Such a scenario would increase the cost of servicing national debts and trigger volatility in the bond market, which directly influences corporate borrowing costs and consumer mortgage rates.
Looking Ahead
Investors are now watching to see if other major institutional players follow BlackRock's lead in reducing exposure to long-term government bonds. While the AI boom is often viewed through the lens of equity growth and productivity gains, BII's warning highlights the hidden macroeconomic cost: the sheer volume of debt required to build the physical foundation of the AI era. The primary question remains whether the productivity gains from AI will materialize fast enough to offset the increased cost of the debt used to fund its creation.