Investment experts warn: pressure on the bond market is reaching a historic peak
The world demands more security and energy infrastructure, but supply is struggling to keep up. A chief investment officer explains why the new reality is forcing investors to recalculate their path.
Global bond markets have been facing increasing pressure in recent weeks, reflected in a sharp rise in long-term yields to their highest level in nearly two decades. According to Idan Azulay, Chief Investment Officer at the Sigma-Clarity investment house, this troubling phenomenon is occurring against the backdrop of moderate inflation data, which points to a profound shift in the global economy.
While in the past inflation was driven by an excess of money, today the central problem lies in rigid supply constraints. The world demands more electricity, copper, and security and technology infrastructure—especially in light of the accelerating artificial intelligence revolution—but supply is struggling to keep up. Establishing a new mine or deploying infrastructure takes years, which neutralizes the effectiveness of the interest rate weapon held by central banks and leaves price as the primary balancing mechanism.
Against the backdrop of rising geopolitical tension and soaring costs in supply chains, investors are forced to adapt to a new reality and demand a higher risk premium for long-term debt. However, at Sigma-Clarity, they also identify a bright spot:
"The global struggle for technological and military supremacy is expected to generate an unprecedented wave of investment in the 'old economy,' which will create significant opportunities for companies providing equipment, energy, and physical infrastructure."
