I have argued the AI boom has many of the hallmarks of a bubble but will keep inflating until interest rates get to prohibitive levels. My research now suggests the marker to watch is the yield on 10-year US Treasury bonds, the global benchmark for long-term borrowing costs, which is now at 4.8 per cent. When it decisively breaches 5 per cent, the upper end of its range since the dotcom period, the AI bubble could pop.
This breach would signal the start of a new era of tighter money, in which AI mega projects will be harder to fund. When Big Tech must compete for capital with a government paying a yield of more than 5 per cent on bonds — which matches an inflation expectations-adjusted return of over 2.5 per cent — many will find themselves crowded out of the debt markets, with serious consequences.
So the longevity of the AI bubble depends on the speed at which demand for US Treasuries declines, pushing up yields.
Foreign treasuries investors have the opportunity to do something hilarious: sell off their US treasuries, end the AI capital bubble and deflate US big tech valuations.
That this joker is predicting it, is proof it wont happen. The dollar ended ten years ago. Putin brought world peace and prosperity (as he bombs Aleppo). They presumably pay him to humiliate himself. https://www.ft.com/ruchir-sharma?page=6
I argue workers are more likely to continue to pay their mortgages, in a strong enough labor market supported by structural demographics where almost 6M workers are leaving the US labor force every year through retirement or death, versus US fiscal policy. Housing supply is low, with millions of units of shortage, that will last for at least into the next decade. Mortgage backed securities are also backed by the federal government in the same way US treasuries are. So, why invest in treasuries?
The 2008 real estate bubble and collapse is very unlikely to happen again in the next decade or two, due to the above factors. There simply isn't enough real estate inventory to acquire, nor enough labor supply to build excess. Foreclosures will be flipped back onto the market at market prices, minimizing any potential MBS investor losses.
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https://archive.ph/QSERF
So the longevity of the AI bubble depends on the speed at which demand for US Treasuries declines, pushing up yields.
Foreign treasuries investors have the opportunity to do something hilarious: sell off their US treasuries, end the AI capital bubble and deflate US big tech valuations.
Norway's Oil Fund Proposes Selling Roughly $80B in US Treasuries - https://news.ycombinator.com/item?id=49564189 - September 2026
Gold replaces US Treasuries as top reserve asset, ECB says - https://news.ycombinator.com/item?id=48375237 - June 2026
Gold overtakes US Treasuries as the largest foreign reserve asset - https://news.ycombinator.com/item?id=47635056 - April 2026
US Treasuries and other government bonds will keep selling off, BlackRock says - https://news.ycombinator.com/item?id=47418483 - April 2026
China Urges Banks to Curb Exposure to US Treasuries - https://news.ycombinator.com/item?id=46942467 - February 2026
Danish pension fund divesting US Treasuries - https://news.ycombinator.com/item?id=46692594 - February 2026
That this joker is predicting it, is proof it wont happen. The dollar ended ten years ago. Putin brought world peace and prosperity (as he bombs Aleppo). They presumably pay him to humiliate himself. https://www.ft.com/ruchir-sharma?page=6
They'd sell it off many moons ago if they could find a safer investment than US treasuries.
They have.
https://news.ycombinator.com/item?id=49564470
Buying mortgage-backed securities always ends up a wise choice :)
I argue workers are more likely to continue to pay their mortgages, in a strong enough labor market supported by structural demographics where almost 6M workers are leaving the US labor force every year through retirement or death, versus US fiscal policy. Housing supply is low, with millions of units of shortage, that will last for at least into the next decade. Mortgage backed securities are also backed by the federal government in the same way US treasuries are. So, why invest in treasuries?
The 2008 real estate bubble and collapse is very unlikely to happen again in the next decade or two, due to the above factors. There simply isn't enough real estate inventory to acquire, nor enough labor supply to build excess. Foreclosures will be flipped back onto the market at market prices, minimizing any potential MBS investor losses.
An exercise in thinking about the unthinkable: a U.S. debt default - https://www.axios.com/2026/09/08/treasury-default-class-exer... - September 8th, 2026