The recent Treasury selloff is less about inflation fears and more about a tug of war for capital. Strong growth, heavy AI investment and large government deficits are all asking investors for money at once, pushing up real yields, the return investors demand after inflation. Even if inflation cools, yields may not fall sharply, and the view from Citadel Securities is that it is too soon to call a peak. The AI boom can support a higher cost of capital, but it cannot make that cost irrelevant, especially as a meaningful share of big cloud spending is now financed with debt. Fiscal support and AI spending may also make some demand less sensitive to rates, weakening the usual cooling effect of higher borrowing costs. For investors, the message is to watch real yields and favor businesses with broad, resilient earnings that can handle pricier financing.

Finsum: AI is rewriting the rules for capital markets, and bond investors should think of it less as a side story and more as a force competing for the same pool of money that sets yields.