The aBP Weekly: AI Keeps Stocks Rising While 5.2% Treasury Yields Flash a Warning
Summary
AI enthusiasm pushed technology stocks higher again, helping the Nasdaq gain 2.1% and the S&P 500 rise 1.2% for the week despite increasingly restrictive financial conditions. AMD crossed $1 Tn in market capitalization as enthusiasm around AI infrastructure and agents accelerated.
Treasury yields sent a very different message. The 10 year U.S. Treasury yield climbed from approximately 5.00% to 5.23%, reaching levels not seen in nearly two decades as stronger economic data increased expectations that the Federal Reserve may need to tighten monetary policy again.
AI spending is increasingly visible in the real economy. Core capital goods orders increased 1.6% in August, while business equipment investment has recorded two consecutive quarters of double digit growth, partly supported by aggressive AI infrastructure investment.
The U.S. China summit reduced immediate trade risk but did not resolve the bigger disagreements. The two countries extended their trade truce by two months, buying markets additional time while tariffs, rare earths and technology restrictions remain unresolved.
