According to the latest report from Bank of America, published this week, the narrative of growth driven by artificial intelligence has become the markets’ last line of defense against the concentration of macroeconomic risks. The bank warned that if sentiment toward AI were to lose its support, a reassessment of the economic growth outlook could trigger a sharp repricing of financial assets and spread tensions beyond bonds to equities.
U.S. Treasury yields have reached their highest levels in a decade, with the 5-year yield hitting 5.033% for the first time since 2007. The MOVE index, which measures interest rate volatility, has exceeded 100, signaling increased pressure in the rates market. Despite turbulence in the bond market and intensifying credit stress—with implied volatility in euro and dollar rates at the 97th and 95th historical percentiles, respectively—the VIX has remained relatively subdued, reflecting investor appetite supported by expectations of AI-driven growth. Bank of America noted that the long-term productivity gains attributed to AI act as a “put option” against macroeconomic headwinds; if the AI narrative were to lose momentum, equity valuation multiples, as well as perceptions of risk, could quickly be reassessed.
$MOVE
$RLC
$NIL
U.S. Treasury yields have reached their highest levels in a decade, with the 5-year yield hitting 5.033% for the first time since 2007. The MOVE index, which measures interest rate volatility, has exceeded 100, signaling increased pressure in the rates market. Despite turbulence in the bond market and intensifying credit stress—with implied volatility in euro and dollar rates at the 97th and 95th historical percentiles, respectively—the VIX has remained relatively subdued, reflecting investor appetite supported by expectations of AI-driven growth. Bank of America noted that the long-term productivity gains attributed to AI act as a “put option” against macroeconomic headwinds; if the AI narrative were to lose momentum, equity valuation multiples, as well as perceptions of risk, could quickly be reassessed.
$MOVE
$RLC
$NIL