atehpengaday
09-03

While the sharp surge in 10-year Treasury yields past 4.8% and spiking rate-hike odds (~70%) reflect real market anxiety over stickier inflation and elevated energy costs, writing off tech and AI capex completely would be premature. Market caps and valuation multiples for long-duration tech will certainly compress under higher discount rates in the short term, but cash-generative mega-caps (like Microsoft and Nvidia) fund the bulk of their massive AI infrastructure out of robust operating cash flows rather than expensive debt markets. While rotating into high-cash-flow defensive names or holding energy as a tactical hedge is a sound defensive strategy ahead of ADP and payroll data, the structural thesis and multi-year capex commitments for AI infrastructure remain heavily intact beyond short-term Fed policy swings.

Two Rounds of Treasury Buybacks, and Long-End Yields Still Hit a New High?
The Treasury bought 20- to 30-year debt again Wednesday, capped at $6B — second round in two weeks; the first filled only $5.2B. The bid came, yields didn't fall: the 10-year closed at 5.11%, up 15bp and the highest since 2007, as was the 30-year. October Fed hike odds hit 69.7%. Stocks fell: Nasdaq -1.13% to 26,936.04, erasing Tuesday's record; QQQ -0.84% to $741.21; S&P 500 -0.75% to 7,706.03; Dow -0.68% to 51,511.59. Bulls say firm data, not weak demand, is lifting yields; bears say two buybacks and a new high prove the bid can't absorb supply. At what yield do you redo the math on stocks?
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Comments

  • feelond
    09-03
    feelond
    DCF sensitivity is the real pain here. For AI names, small changes in terminal assumptions get brutal fast even before the actual capex thesis breaks.
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