Deutsche Bank Warns of Excessive Bearish Bond Sentiment

George Saravelos, global head of FX research at Deutsche Bank AG, stated that negative sentiment regarding fixed-income assets has become excessive. In a note published Friday, Saravelos argued that the market is underpricing the risk of an artificial-intelligence collapse, which he suggests could trigger a sudden rush into bonds.

Saravelos reported that clients in the United States believe AI is driving higher yields and that the U.S. Treasury has lost control of the long-end of the curve. This environment has led to investor speculation that the government may suspend the issuance of 20-year Treasuries.

Beyond U.S. markets, Saravelos noted that investors remain overwhelmingly bearish on French debt following a period of turbulent selloffs.