US Treasuries in driver’s seat for risky AI stocks as investors grapple with elevated yields

Fears of a debt issuance glut swept across the US bond market this week, driving the 30-year yield to a nearly two-decade high Stock traders in mainland China and Hong Kong are looking to the US bond market for clues on the sustainability of the artificial-intelligence trade after rising Treasury yields jolted global financial markets. Elevated yields on longer-dated Treasuries, a benchmark for global funding costs from mortgage rates to corporate borrowing, have emerged as a constraint on risk assets. That poses a particular threat to technology stocks trading at stretched valuations after years of frantic buying. Tech firms are also borrowing heavily to fund AI infrastructure investments. “Rising US Treasury yields put pressure on valuations across risk assets,” said He Siyao, a fund manager at HSBC Jintrust Fund Management. “For equities, AI is becoming more sensitive to the interest rate, because industry funding shifts from free cash flow to debt financing.

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