Massive AI investments are consuming vast amounts of capital, pressuring corporate debt yields and running parts of the economy hot. In this context, energy prices propelled by geopolitical tensions are lifting headline inflation. Kevin Warsh, who took over as Fed chief in May, argued last year that AI would make almost everything cost less and trigger a productivity boom. However, comparisons with the 1990s highlight structural differences: U.S. deficits are near 6% of GDP, the aging population is rising, and globalization is reversing with reshoring. The bond market is bracing for a meaningful chance of a rate hike this week.
Source: Read the original article
