US Bond Yields Surge to Highest Level Since 2002 as Jefferies Warns AI-Driven Stock Rally Faces Pressure
Summarized by AI; it may make mistakes. Check important info
Summarized by AI; it may make mistakes. Check important info
US equities face mounting valuation pressure as benchmark government bond yields climb to multi-decade highs, threatening to undercut the artificial intelligence investment boom that has shielded global stock markets from rising interest rates and geopolitical friction, according to Chris Wood, Global Equity Strategist at Jefferies.
Writing in his market newsletter Greed & Fear, Wood highlighted that the yield on the 10-year US Treasury note reached 5.34%, while the 30-year yield touched 5.69%—marking the highest borrowing costs seen on these instruments since 2002. The persistent upward push in G7 sovereign yields signals a continuing structural bear market in government debt, creating tighter financial conditions worldwide.
Indian Markets Suffer Eighth Weekly Fall Amid Global Rate Pressures
The ripple effects of rising US Treasury yields continue to spill over into emerging markets, contributing to a prolonged drop in Indian shares. Local indices logged an eighth consecutive weekly decline through Friday as foreign capital reallocation and surging global yields weighed heavily on domestic investor sentiment in Mumbai.
While US stocks previously weathered rate hikes better than historical trends expected—failing to follow the typical pre-midterm election dip owing to robust corporate earnings—that resilience relies on narrow foundations. Heavy corporate spending on artificial intelligence infrastructure has driven recent profit growth, but market watchers now question the longevity of this capital expenditure wave.
Questions Mount Over AI Returns and Capital Expenditure
The primary risk confronting equity valuations hinges on whether tech conglomerates can monetize the vast sums committed to AI infrastructure. If corporate earnings stall or fail to justify these capital outlay levels, elevated bond yields will offer an increasingly attractive alternative to equities, squeezing stock multiples further as the US Federal Reserve maintains a hawkish stance.
