Interest Rates to 10%: Why the Treasury Market is the Real Speculative Bubble (Not AI) | Russell Clark

The global economy is transitioning from a four-decade era of pro-capital, deflationary policies toward a pro-labor, inflationary environment characterized by rising wages and higher interest rates. Hedge fund manager Russell Clark posits that the US Treasury market faces significant risks as foreign demand for sovereign debt wanes and governments prioritize full employment over fiscal austerity. To restore housing affordability for younger generations, nominal wage growth must reach 7% annually, necessitating a 10% Treasury yield to maintain a 3% real rate. While AI-related equities are often labeled speculative, their massive capital expenditure represents a strategic defense by tech incumbents to protect existing business moats against new entrants. Consequently, private credit and equity sectors, which thrived on cheap capital, face mounting pressure as the era of easy money concludes and interest rate risk remains persistently mispriced.