{
  "id": 2078116,
  "title": "US Treasuries in driver’s seat for risky AI stocks as investors grapple with elevated yields",
  "url": "https://urgent.news/2026/08/20/us-treasuries-in-drivers-seat-for-risky-ai-stocks-as-investors",
  "topic": "ai",
  "section": "AI",
  "published": "2026-08-20T05:00:38.000Z",
  "source": {
    "name": "SCMP Business",
    "slug": "scmp-business",
    "url": "https://www.scmp.com/business/china-business/article/3364646/us-treasuries-drivers-seat-risky-ai-stocks-investors-grapple-elevated-yields"
  },
  "original_language": "en",
  "account": "Mainland Chinese and Hong Kong traders are turning to US bond markets for insights into the viability of the artificial intelligence (AI) sector amidst surging Treasury yields. The soaring yields on extended-dated Treasuries, a key determinant for funding costs worldwide, have become a hindrance for risk assets. Tech companies, heavily reliant on borrowing to finance AI infrastructure, are particularly vulnerable. \"Rising US Treasury yields exert pressure on valuations across risk assets,\" stated He Siyao, a fund manager at HSBC Jintrust Fund Management. \"AI becomes more susceptible to interest rate fluctuations as industry funding transitions from cash flow to debt financing. Valuation pressures will also cloud earnings forecasts and heighten sector volatility.\" The US bond market witnessed a surge this week, with the 30-year yield hitting a near two-decade peak of 5.32%, while the 10-year yield rose to levels last observed in early 2025. This surge prompted bond investors to demand higher compensation for the term premium, shielding them from excessive yield supply. The US government is issuing more debt to finance the budget deficit, while major tech firms are also expanding bond borrowing to fund their AI expansion. This trend has raised concerns about the valuation of high-valued stocks. In Shanghai, the Star Market 50 index of AI chipmakers is valued at 124.6 times earnings, nearly nine times the multiple for main board-listed companies. Hong Kong-listed tech stocks are also vulnerable to US market movements due to their substantial exposure to foreign funds. Despite a 10 basis point drop in 30-year US Treasury yield to 5.18%, investors remained cautious, pointing out that the measure didn't fully address underlying bond market issues. State Street Investment Management strategist Masahiko Loo highlighted that while the steps might improve market functioning, they fail to tackle inflation, fiscal concerns, rising term premiums, and AI-driven capital demand. The US federal debt has surpassed $40 trillion, a record high, with American hyperscalers like Amazon and Alphabet potentially selling up to $250 billion in bonds this year, already totaling over $195 billion in the first half. Charu Chanana, chief investment strategist at Saxo, suggested that investors might increasingly distinguish between firms able to fund growth through cash flow and those requiring debt financing. \"Companies capable of self-funding their growth may command a premium,\" she remarked. \"We do not view this as necessarily negative. If investment drives productivity, corporate earnings, and nominal growth, risk assets can still thrive.\"",
  "summary": "Stock traders in mainland China and Hong Kong are looking to the US bond market for clues on the sustainability of the artificial-intelligence trade after rising Treasury yields jolted global financial markets. Elevated yields on longer-dated Treasuries, a benchmark for global funding costs from mortgage rates to corporate borrowing, have emerged as a constraint on risk assets. That poses a…",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}