Will term premia plunge again when the AI bubble bursts?
Although there are many reasons to expect recent upward pressure on the 10-year Treasury term premium to persist, they could collectively be more than outweighed for a while by a bursting of the bubble in AI, which is something we envisage occurring next year. Even so, we’d be surprised if the term premium dropped back as much as it did in 2000 when the dotcom boom turned to bust.
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