Market Insights

At the beginning of this decade, US bond markets operated under extraordinary monetary accommodation. The period, which economists refer to as ZIRP (zero interest rate policy), created market conditions that drove yields on Treasury inflation-protected securities into negative territory. As for today, those negative yields seem like a relic of the past, as inflation-protected yields have swung well into positive territory. Investors have radically repriced the real cost of money. 

Markets continuously provide information to investors, but sometimes the message becomes clearer when several markets are viewed together. Recently, the relationship between interest rates, equities, foreign exchange rates, and scarce assets like gold has become particularly noteworthy. These markets reacted after the US Treasury announced an expansion of its buyback program for long-term government bonds.

Artificial intelligence has been one of the most powerful investment themes of the decade, but lately investors have begun questioning the profits that will come from it. Their concerns matter. Many of the world's largest technology companies are spending extraordinary amounts of capital building data centers, purchasing semiconductors, and developing increasingly sophisticated AI models.