America’s AI Boom Is Squeezing Main Street | Weekly Roundup

US Treasury yields are rising primarily due to market expectations of a higher terminal Fed rate, fueled by robust nominal GDP growth rather than inflation or fiscal concerns. The US economy currently exhibits a narrow, consumption-driven growth model heavily reliant on hyperscaler AI capital expenditure, which contrasts sharply with the stagnation observed in sectors like housing. Meanwhile, European economies face severe industrial decline, evidenced by persistent corporate bankruptcies and a lack of AI-driven growth, further complicated by a rigid focus on price stability and external supply shocks. Policymakers are attempting to navigate these imbalances through market support and by engineering captive demand for Treasuries. Additionally, the US is actively shifting its supply chain reliance from China to Japan and South Korea to maintain its competitive edge in the AI-dominated global landscape.