The US Treasury 10 year yield has dropped 14 basis points today (26 basis points since it's peak 10 days ago) as fresh headlines appear about higher inflation. Mainstream financial media is so confused about the state of affairs that CNBC presented this sentence in an article today:
Quote:
Treasury yields dropped Thursday, as investors cashed in some technology shares today and fled to the safety of bonds following the latest inflation data.
This is non-sensical because bonds are typically where you would want to run AWAY from with higher inflation. The recent runup in Treasury rates has been driven by higher inflation AND by a crowding out of credit by the surge into AI financing. The wealthy need places to put their money and the latest bubble they have created is the AI bubble (before that was the mortgage bubble and before that was the dot-com bubble). Global AI spending in 2026 has increased 47% to $2.6 trillion. That is larger than the GDP of France.
As AI investing approaches the "trough of disillusionment" investors are leaving the sector and seeking safety in US Treasuries (as they always do). Wall Street romantics like to talk about "bond vigilantes" forcing yields higher because of national debt and inflation but this outdated term harkens back to an era of fewer, smaller investors (in a far more equitable society in terms of wealth) who were able to wield clout on the much smaller US Treasury bond market of decades ago (debt to GDP when the term originated in 1983 was 24%, compared to 126% now). Now the massive interests involved move markets in a more far reaching way. The AI bubble has been crowding out Treasury investment and driving up interest rates. Going forward the drop in Treasury rates will likely be commensurate with the size of the AI bubble decline.
https://www.cnbc.com/2026/10/15/us-treasury-yields-investors-economic-data-.html https://memeburn.com/ai-global-funding-statistics-2026/