The 10 year treasury yield climbed to 5% on Monday, its highest level since 2023, as a global selloff in artificial intelligence stocks coincided with a sharp jump in oil prices, according to the Wall Street Journal.

The Nasdaq fell as investors dumped AI-linked shares after industry leaders themselves called for a slowdown in the sector’s breakneck buildout, citing safety concerns. The move ties the bond market’s benchmark long-term rate directly to a crisis of confidence inside the AI trade it has helped finance.

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Traders had been watching the 10 year yield approach 5% for weeks, but the AI stock rout gave the move its trigger this week, ahead of a Federal Reserve decision, according to CNBC.

Rising yields raise the discount rate applied to future cash flows, a mechanic that hits high-growth AI names such as those driving Nasdaq gains harder than value stocks, since their valuations lean heavily on profits investors expect years out.

The Feedback Loop Between AI Spending And Bond Yields

Wellington Management has flagged a less obvious channel connecting AI capital expenditure to Treasury yields, the debt financing hyperscalers use to fund data centers and chips adds to bond supply and can push yields higher, complicating the Fed’s rate-policy math even as inflation cools elsewhere.

A Bubble Warning Gains Traction

Fortune reported that at least one analyst now expects a 21% stock market correction in 2027, arguing the AI-led rally has entered a late-stage bubble phase. A 5% 10-year yield raises borrowing costs across the economy, and if AI infrastructure spending was propping up growth forecasts, a pullback there could remove a key support for both equities and yields simultaneously.

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