Analyst: Bond market sell-off looms, AI stock frenzy may be impacted

According to Golden Ten Data on May 16, investors are fervently chasing the surge in technology and AI stocks, but it is also widely acknowledged in the market that rising bond yields could knock the stock market off track. Most respondents indicated that if the 30-year U.S. Treasury yield remains steadily above 5%, it would pose issues for AI stocks. Alexandre Drabowitch, Chief Investment Officer at Société Générale Private Wealth Management, described this as the "danger zone" for the stock market. Kevin Thozet of Carmignac's Investment Committee noted that long-term U.S. Treasury yields sit at a crucial intersection for AI capital expenditure and private credit financing costs. This impacts government deficit financing costs and could have an "adverse effect" on household wealth. Benoit Pelouey, Chief Investment Officer at Natixis Wealth Management, stated: "Although bullish sentiment in the stock market is strong, rates are still climbing." He warned that if yields continue to rise, the market could face a "reality check."