Global markets transitioned into a higher-volatility regime during the week as AI-related disruption concerns broadened across
sectors, even as macro fundamentals remained supportive. Softer US inflation increased demand for Treasuries as markets raised
expectations of Fed easing, creating a supportive policy backdrop even as growth equity valuations continued to adjust.
Key Themes
- AI Anxiety & Volatility: Selling broadened beyond mega-cap tech into financials and cyclicals, with the NASDAQ -1.4% WoW and VIX rising to 21, reflecting valuation compression and sector rotation rather than systemic stress.
- Inflation Moderates as Growth Holds: US CPI eased to 2.4% YoY (0.2% m/m) while payrolls rose 130k and unemployment fell to 4.3%, driving a 15bps decline in the 10Y yield to 4.04% and reinforcing expectations of gradual Fed easing, not recession.
- Japan Political Clarity: The LDP’s supermajority victory supported a 4.96% WoW rally in the Nikkei despite yen appreciation (-2.9%), with stable JGB yields (~2.22%) signaling orderly normalization.
- Commodity Divergence: WTI Crude Oil fell 1% to $63 on OPEC+ supply and US–Iran developments, while gold rose 1.6% to $5,042 as lower yields supported rate-cut expectations, highlighting positioning shifts rather than demand weakness.
