Oil-bond correlation breaks; AI risk takes center stage

Jeffrey Rosenberg of BlackRock attributes the shift to rising AI risk, noting that market weakness in AI stocks—such as Google's largest single-day drop—is now seen as a sign of broader economic decline. Q3 data shows strong equipment investment and consumption driven by AI-related spending. While Fed Chair Warsh emphasized broad capital spending, Rosenberg argues that any AI downturn is now interpreted as a threat to growth and inflation outlook, potentially boosting long-end Treasury yields.

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