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Sentiment Shifts on AI Capex Spend

Tony Pasquariello, Joshua Schiffrin, Dominic Wilson, Josh

Global equity markets are diverging as overseas regions, particularly Japan and South Korea, surge to new highs while U.S. indices trade sideways amid intense skepticism regarding AI profitability and debt-fueled capital expenditure. This rally is driven by a structural expectation that artificial intelligence will ultimately induce disinflation, prompting investors to reallocate capital into non-U.S. assets even as the Federal Reserve holds rates steady through mid-year. Currency and bond markets are simultaneously adjusting to anticipated policy normalization, with a weakening U.S. dollar and steepening yield curves reflecting a consensus that growth in Asia will dominate the coming macro regime.