Bond yields have dipped from their peak, prompting stock buyers to return after a tech-led selloff, though high borrowing costs still threaten AI investment.
01Summary
- 01U.S. futures rose on Monday after a tech-led selloff on Friday, with Nasdaq futures up strongly before the open in New York.
- 02The 10-year Treasury yield fell to 5.08% from a recent peak of 5.3%.
- 03Bank of America says the weighted average cost of capital for hyperscalers is 10%, up from 4% in 2023.
- 04Bank of America's Savita Subramanian forecasts the capex wave may continue but could shift next year if yields do not decrease.
- 05Last week's market risk was compared to the Great Financial Crisis by Bank of America's Michael Hartnett team.
02Why it matters
Higher bond yields make borrowing costlier for tech companies funding AI development, directly affecting investment returns and stock valuations. If yields stay high, the AI capex boom may slow in 2025.
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