Bond yields are spiking, oil is up
Rising Treasury yields, geopolitical risk and fresh AI safety concerns are hitting markets, but many investors remain bullish on AI spending and earnings.
TL;DR
- Global government bonds are experiencing a sell-off, with U.S. 10-year Treasury yields exceeding 5%.
- Oil prices remain above $100 a barrel due to supply concerns related to the Iran conflict.
- Despite market volatility, major stock indices like the S&P 500, Nasdaq, and Dow Jones have seen significant gains year-to-date.
- A Bank of America survey indicates that investors, though less excessively bullish than before, remain optimistic about growth and earnings, with continued heavy spending expected on AI.
- Money managers largely maintained an overweight position in global equities in September, and expectations for earnings-per-share growth are high.
- Allocation to bonds is at its lowest level since May 2022.
- Strategists at BlackRock Investment Institute maintain a pro-risk stance, believing that rising yields reflecting stronger investment and growth can offset higher capital costs.
- Concerns about the pace and safety of AI development exist, but many see recent AI sell-offs as buying opportunities.
- Bottlenecks in AI data centers, such as access to semiconductor wafers and power, are expected to persist.
- Investment firms favor a diversified approach across the AI value chain, including infrastructure, platforms, and software companies.