A deepening unwind of the AI trade dominated the week. Concerns over how AI infrastructure spending is financed triggered a sharp rotation out of technology and chip stocks, and the Nasdaq posted its worst day since June. Brent crude topped $114 on Middle East tensions, and France’s sovereign bond crisis reached its most acute phase since 2011.
The S&P 500 ended flat (+0.05%) and the Dow gained 1.66% on defensive rotation, while European indices bore the brunt: Euro Stoxx 50 –1.9%, Ibex –1.88%. Investors fled to Treasuries and Bunds; the US 10Y fell about 10bps to 4.97%. French 10Y yields jumped 26bps to 5.07%, a 24-year high, as the OAT-Bund spread widened to ~172bps. LatAm USD bonds broadly tracked the Treasury rally, with Colombia and Argentina the exceptions.
Next week: Brazil’s presidential runoff, rate decisions in Chile and Colombia, and Mexico’s 3Q GDP.