Bond markets are repricing for higher nominal growth and the prospect of Fed rate hikes, with the front‑end of the curve now priced for roughly four additional hikes over the next 12 months—slightly above consensus expectations. —Seth said this during his interview.
The slowdown in AI capital expenditure is already underway, driven by tightening cost of capital and growing political pushback on data‑center implementation. —Seth added that the second derivative of AI capex is starting to shift.
Fixed‑income assets have become attractive for long‑term investors, especially those looking at the front‑to‑belly portion of the curve, as financial conditions remain relatively loose in the U.S. —Seth noted.
For equities, the impact of a slower AI capex trajectory could weigh on tech stocks that rely heavily on AI investment, potentially tightening valuation multiples.
Investors should monitor bond repricing, AI capex trends, and the political landscape, particularly the upcoming U.S. midterm elections, as they could shape the trajectory of both fixed‑income and equity markets.