Question: is there also an FX channel? In other words is there a natural limit to how wide the gap between US long rates and develop market long rates can get? Is there a world in which if US is yielding 500 basis points more than Germany, the flows into treasuries would overwhelm any other factor, driving up the dollar and slowing down the economy that way?
Phenomenal post! Me thinks energy producers for data centers is the right play for AI at the moment. It will work until growth tanks, but with 7% deficit to GDP that might take a lot of time to materialize. Everyone wants this economy to run hot.
Question: is there also an FX channel? In other words is there a natural limit to how wide the gap between US long rates and develop market long rates can get? Is there a world in which if US is yielding 500 basis points more than Germany, the flows into treasuries would overwhelm any other factor, driving up the dollar and slowing down the economy that way?
Phenomenal post! Me thinks energy producers for data centers is the right play for AI at the moment. It will work until growth tanks, but with 7% deficit to GDP that might take a lot of time to materialize. Everyone wants this economy to run hot.