Bond yields may be finally baking in an AI world

ALTHOUGH some are puzzled by the coincidence of an artificial intelligence boom and rising borrowing costs, they are closely linked.

Beyond the immediate heat of the AI investment frenzy, a long-term productivity surge is lifting estimates of neutral interest rates even as workers’ share of the gross domestic product pie declines.

The Iran-related oil shock and its immediate inflation fallout explain some of this month’s bond market jitters. Record-high stock markets have been harder to explain during an energy crunch.