After 6 Years of Losses, Ariel's Bobrinskoy Says Bonds Are Back

Ariel Investments vice chairman Charlie Bobrinskoy suggests bonds are now a worthwhile purchase. This comes as the 10-year Treasury yields 5% and shares tied to artificial intelligence show instability.

Bobrinskoy stated on Tuesday to CNBC that bonds delivered negative returns across six years due to surprises from inflation and deficits. Conversely, Bloomberg data reveals the US Aggregate index, a broad gauge of investment-grade bonds, achieved a 7.30% gain in 2025 and 1.25% in 2024.

He mentioned a recent 10-year yield near 5.3%, corresponding to a real yield of approximately 3%. Federal Reserve data indicates the 10-year rate dropped to 4.96% on Oct. 22 and settled at 5.00% on Oct. 23; its inflation-adjusted yield was 2.66%.

Demand for credit keeps yields elevated, according to Bobrinskoy. This is partly fueled by funding requirements for AI and partly by European governments facing deficit issues similar to Washington’s. He asserted, "…for the first time in two decades, we have decent expected returns in the bond market."

Bobrinskoy advised spreading AI investment across energy, consumer discretionary, home products, and bonds, warning that poor returns from roughly $700 billion in data center spending could negatively impact numerous Nasdaq firms.

MAI Capital Management’s third-quarter review, released on Oct. 2, detailed a bond selloff that pushed the 10-year yield up to about 5.3% from 4.2%.

Schwab points to upcoming Big Tech earnings this week as the next indicator of AI performance. Weak reports might prolong the demand for Treasuries that lowered yields last week, whereas strong outcomes could restart borrowing pressure from AI sectors.