AI is still performing poorly, while Bitcoin is outperforming everything else. U.S. yields are soaring, along with a chart that measures… fear.

While Donald Trump and Xi Jinping discuss—above all—AI, stocks in the sector are experiencing another nightmare session. Nvidia is down, Broadcom is down, Micron is down, and the so-called hyperscalers are also under pressure, due mainly to bad news from Oracle, which is trying rather desperately to withdraw from the construction of a data center in Texas. The crypto world, meanwhile, is recovering—a clear sign of a very complicated phase in terms of interpreting virtually every market.

The negative performance of major AI and chip stocks is also weighing on the Nasdaq-100, which is heading toward another negative close. The issues surrounding bond yields, inflation, and oil continue to dominate. At least for now, these are issues that do not appear likely to be resolved in the short term.

U.S. bonds remain under pressure

The sell-off in U.S. government debt continues, with 10-year Treasuries now demanding yields above 5.16% in the secondary market. Until fairly recently, 5% was considered a sort of red line that should not be crossed. Despite announcements from the U.S. Treasury that it will buy back bonds, and despite threats from Treasury Secretary Scott Bessent, the markets are firmly in control of the discussion.

As for 30-year bonds, yields are at levels not seen since 2004. The upward pressure on yields comes from a mix of factors, which we have already analyzed on this website, involving inflation expectations and, consequently, expectations regarding future monetary policy decisions.

Bitcoin recovers after a downbeat morning

After struggling to remain above $83,000, BTC $84,162 ▼ -0.15% is confirming its excellent form by recovering convincingly to above $84,000. Regardless of the moves that may occur as we approach the weekend, it is clear that the leading cryptocurrency is experiencing a notably favorable period, showing greater resilience than assets considered much more established.

This morning we published a brief guide to the current and future declines, which provides some explanation of the situation markets were experiencing, at least before today’s opening.

The dollar remains very strong

The dollar’s climb continues, with the DXY index confirming the strength of the USD and moving above 101.3. This is the direct consequence of concerns gripping the economy over possible future rate hikes by the Federal Reserve.

The FedWatch Tool still prices in a rate hike at the October meeting with a 70.9% probability. More concerning, however, are the outlooks through the end of 2027: markets are pricing in as many as three to four rate hikes in that period. Until last week, such a scenario would have seemed like science fiction.