“Doctor Doom” is rarely optimistic! Roubini: The AI boom is driving higher yields and is a “sign of stronger growth” rather than a precursor to a bond crisis

The Zhitong Finance App learned that when the global bond market experienced the fiercest simultaneous sell-off in nearly 20 years, and the yield on long-term bonds between the US, Japan, Europe, and the UK hit a new high in more than 10 years, the economist Nouriel Roubini (Nouriel Roubini), famous for his pessimistic predictions, unexpectedly made an optimistic judgment. The “Doomsday Doctor,” who accurately predicted the 2008 global financial crisis, said in an interview on September 4 that the recent surge in yield is not a sign of a financial crisis, but rather a reflection of the optimism and capital expenditure growth brought about by the boom in artificial intelligence.

From “stagnating deflation” to “a new era of investment”: Roubini's narrative transformation

During the 2008 global financial crisis and many years after, Roubini was famous for continuing to issue pessimistic warnings. However, in recent years, his tone has clearly changed to optimism. As early as the end of 2025, he predicted that the “Golden Girl” scene might appear in the US in 2026. In August of this year, he made it even more clear that the US is ushering in an “extraordinary AI-driven productivity revolution.”

In his speech in Italy this time, Roubini clearly refuted the market's concerns about the AI bubble. “Some people are concerned that AI might be a bubble; that's not my opinion,” he said. “I think this is a long-term increase in capital expenditure and potential growth, but there may be some adjustments.”

As for the root cause of the rise in yield, his judgment directly points to the real demand for technology investment. At Cernobbio (Cernobbio) on the shores of Lake Como, Italy, Rubini said, “There are indeed some financial concerns, but I think the biggest drivers of the rise in real returns are capital expenditure, artificial intelligence, and future prosperity in technology.” He pointed out that part of the increase in bond yields may actually be sending a signal of stronger growth — “usually when risk appetite rises, economic growth is stronger, stock prices rise, and bond yields also rise.”

Roubini further explained his macro-narrative shift: “Some of these are due to secular factors, and we have come out of a period of near deflation. Bond prices are high now because the inflation rate is not zero, but is close to 2% globally.” He believes that all economies have escaped the low inflation trap and ushered in a new era of investment and growth.

The real engine for surging yields: AI capital spending rather than financial loss of control

Roubini's views are in stark contrast to mainstream market narratives. At the beginning of September, the global bond market experienced a rare simultaneous sell-off — US 10-year Treasury yields climbed to 4.816%, the highest since the end of 2023; Japan's 10-year Treasury yield broke 3% for the first time since 1996; Germany's 30-year yield hit the highest since 2011; and the UK 30-year yield rose to 5.869%, the highest since 1998. The Bloomberg Global Government Bond Index yield rose to 3.72%, the highest level since mid-2008.

One popular opinion is that this “sharp drop” in bonds may indicate that economic growth will be severely impacted and will cause pain to US and global stock markets. However, Roubini believes that the biggest factor driving up yields is technology spending, not financial loss of control — the capital expenditure boom from artificial intelligence infrastructure construction is driving up real returns.

Roubini believes that this round of sell-off is fundamentally different from 2022. The 2022 bond market crash was a “bazooka” shock driven by soaring inflation and aggressive interest rate hikes by central banks — global government bond yields soared 62 basis points in 20 days, and bond prices plummeted 23%. However, although the sell-off in 2026 was just as drastic, global government bond yields increased by only about 17 basis points over the past 20 trading days, and bond prices fell by about 4.2% from peak to bottom.

Roubini did not turn a blind eye to financial problems. He acknowledged that “there are indeed some fiscal concerns,” and pointed out that the US will definitely need to implement strict fiscal austerity and welfare system reforms in the next few years. But he insisted that from a more macro perspective, the global economy has entered a new phase driven by AI investment.

Downside risks remain: Roubini's “conditionally optimistic”

Despite the warmer tone, Roubini did not completely abandon his sense of risk. He listed a number of risk factors that may trigger adjustments, including the continued partial closure of the Strait of Hormuz, the possibility that the Middle East war will break out again, fiscal consolidation may damage domestic demand, and a possible bubble in the AI sector.

Roubini admitted: “There may be some adjustments. Downside risk is still one of those cliché questions. But we're in the midst of a global investment boom, which will lead to higher productivity and faster growth, so I'm generally optimistic.”

Roubini pointed out that another important reason for rising yields is that the world has emerged from a long-term low inflation trap. This means that the current market environment is completely different from the pattern of “low growth, low inflation, and low interest rates” of the past decade.