elevated layoff announcements – helped Treasuries rally and pushed short-term yields lower, reinforcing a defensive mood.
Why should I care?
For markets: AI optimism meets an expense line.
When the biggest companies guide to heavier capex, investors often reprice riskier assets and favor cash-like havens. A firmer dollar and falling yields can tighten financial conditions, which tends to weigh on growth stocks first. Meanwhile, moves in oil and metals showed how quickly “risk-off” can spill across sectors as traders cut crowded positions.
Zooming out: The AI boom is colliding with a late-cycle economy.
If hiring keeps cooling, bonds may keep benefiting even as central banks stay cautious about declaring victory over inflation. That leaves markets in a tricky spot: earnings need to catch up to AI infrastructure spending, or valuations will keep feeling fragile. The next phase of the AI trade may hinge less on hype and more on whether these investments translate into durable productivity and profits.
