The Fixed Income Digest: The hotter, faster future is here

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The Fixed Income Digest: The hotter, faster future is here

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The Fixed Income Digest

The hotter, faster future is here

World in 2030: inflation now, deflation later 15 May 2026

We summarize BofA Thematic Strategist Haim Israel’s compelling framework for the United States

future, presented at our recent Securitized Products Conference. The global economy is

Chris Flanagan

likely entering a technological “singularity” this decade, driven by accelerating data FI/MBS/CLO Strategist

creation, computing power, artificial intelligence (AI), and ultimately quantum computing. BofAS +1 646 855 6119

Traditional models and timelines are likely breaking down as growth becomes nonlinear christopher.flanagan@bofa.com

and arrives in step changes driven by technological breakthroughs. The next several Alvin Fung

years are likely inflationary due to massive investment needs, followed by a highly ABS Strategist BofAS

deflationary phase in the early 2030s, as AI drives down the cost of intelligence, energy, +1 646 855-9091

materials, and productivity across the economy. The recent tech rally suggests this alvin.fung@bofa.com

transition may already be unfolding faster than expected just six weeks ago.

Hot policy + AI capex = nominal GDP/wealth growth cycle

The “run it hot” policy backdrop – OBBBA, wartime spending – is intersecting with an Exhibit 1: Total returns since March 31

AI-driven capex boom in a way that reinforces nominal GDP growth (1Q26: 6% YoY), and 2026 YTD

even as inflation ultimately stabilizes. Market pricing is consistent with this path, with Nasdaq 100 leads total returns as of

5y5y inflation swaps anchored at 2.45% and 10-year real yields near 2.0%. The key 5/11/2026.

dynamic is a wealth-to-redeployment loop: roughly +$15 trillion per year of US Total