From Barron’s today
“The narrative in rates today is all about inflation and fiscal problems,” says Torsten Sløk, chief economist at Apollo. “But the narrative going into 2027 is going to be all about the success or failure of AI.”
Slok predicts that if AI manages to boost productivity, this will be “massively deflationary and push rates lower.” But if AI doesn’t deliver the expected returns to Corporate America, “the bubble bursts and the Nasdaq is down 50% as investors rotate out of equities into Treasuries, and long rates fall dramatically.”
Not said, but implied, is that if companies do see return AI it would make sense to expect the Capex build out to continue.