Citadel Securities says the recent surge in Treasury yields reflects stronger US growth and competition for capital rather than rising inflation. Nohshad Shah, head of EMEA fixed-income sales, notes that almost all of September’s yield increase came from real yields, while inflation expectations stayed stable. He attributes this to fiscal easing, loose financial conditions, and heavy AI investment.
The market is repricing growth persistence and the real rates needed to accommodate it, with investors demanding higher returns after inflation. Shah warns that financing AI spending and government deficits increases capital competition, requiring higher real returns. He is reluctant to call a yield top just because inflation eases, noting that further increases would require fresh repricing of growth, policy, or term premia.
With sticky inflation and resilient demand, Shah finds current expectations for four Fed rate increases reasonable. He highlights that fiscal support and AI investment make demand less rate-sensitive, while de-globalization limits goods disinflation. Higher real rates could test the AI boom, as one-third of hyperscaler spending is debt-financed.
Shah prefers Microsoft and Alphabet’s Google for their economics beyond AI model access, stating the boom can justify higher capital costs but not make them irrelevant.
स्रोत: Bloomberg Markets · HeadlinesBriefing द्वारा सारांशित