1. A global bond selloff intensified, jolting investors as robust US economic data and weak demand at a debt auction drove Treasury yields across much of the curve to their highest levels in almost two decades. The bruising losses on Wall Street swept into Asia Pacific with bonds sliding in Japan, Australia, New Zealand, as well as emerging markets. The US 10-year yield steadied at 5.12% in Asian trading, after Wednesday’s 15-basis-point surge, the biggest since the turmoil triggered by President Donald Trump’s April 2025 tariff announcement. Weak demand at an auction of five-year notes had pushed the yield above 5% for the first time since 2007. (Source: bloomberg.com)
2. John Authers:
The rise in bond yields looks alarming and has had a horrible effect on US mortgages, with 30-year fixed rates back above 7%. But the evidence is that the overall rise in yields is more a response to a “good” rise in growth, rather than to other widely cited potential causes. Consumers’ inflation concerns have risen since the Iran war drove up oil prices nearly seven months ago, but longer-term market-based inflation expectations have barely budged. Yields can be broken into real and inflation-driven components using the gap between fixed income and inflation-protected bonds (TIPS). Inflation breakevens barely budged over the last five years; real yields are now higher and account for all of the rise of the last five years. (Source: bloomberg.com)
3. The AI build-out is on track to become the biggest economic bet in U.S. history, dwarfing the investments made to fund other huge U.S. infrastructure projects such as the railroads, the highway system and the plumbing for the internet. Total investment in data centers and related artificial-intelligence infrastructure is projected to total $10.3 trillion from 2025 to 2032, according to new estimates by economist Stijn van Nieuwerburgh published by the Brookings Institution. That is a staggering 3.6% of gross domestic product a year, on average. Never before has the U.S. economy been so dependent on the build-out of a single industry. The investment is transforming every corner of the economy, creating hundreds of thousands of jobs and minting new billionaires. It is also creating significant risk, as much of it is built on debt. An abrupt slowdown could ignite shock waves throughout the U.S. economy. (Sources: wsj.com, brookings.edu. Italics mine.)
