AI Market Volatility Rises as Treasuries Attract Safe-Haven Flow

Despite assurances from industry leaders and government officials that the AI sector remains stable, market volatility has surged. The Nasdaq 100 recorded its largest two-week decline since April, highlighting growing investor unease. Credit risk indicators have also spiked, signaling heightened market turbulence. As AI-related stocks fell 4.9%, demand for Treasuries increased, pushing the 10-year yield below 5% for the first time in a month. This marks a return to the safe-haven trade that had waned during the summer months. The shift reflects a broader risk-off sentiment among investors, who are prioritizing liquidity and stability over high-growth assets. Analysts suggest that while AI remains a key growth driver, its current valuation may be overextended, prompting caution. The renewed focus on Treasuries could have broader implications for fixed-income markets and the overall risk appetite of investors.