Aug 24, 2026 · 44 min
Higher real rates reshape bonds, stocks and the AI trade
Why Every Trader on Earth is Watching the 10-Year Treasury Now with Nick Colas
The debate over long-term Treasury yields now reaches beyond fixed income, influencing equity valuations, AI investment and U.S. geopolitical power.
- 1Higher real rates, not only inflation expectations, are driving long-term Treasury yields upward after years of near-zero rates.
- 2Advisors may favor shorter maturities until weaker economic data or recession risk makes longer duration more attractive.
- 3AI spending and U.S. technology leadership could justify elevated valuations, but investors are funding future monetization rather than current returns.
Don't miss
Nick Colas explains why the 1990s comparison misleads: similar long-term yields supported markets then after falling from much higher levels, unlike today’s rise from near zero.
The brief
Josh Brown and Nick Colas open with the Treasury market’s unusual divergence from stocks, focusing on why the long end matters for investors.
Colas argues that rising long-term yields reflect higher real rates as well as inflation expectations, with quantitative tightening, resilient growth and deficits lifting the neutral-rate debate.
For fixed-income portfolios, they favor a shorter maturity stepstool over a 30-year ladder, while longer duration becomes more useful when growth weakens or recession risk rises.
The comparison with the 1990s breaks down because similar yields arrived after a decline from higher levels then, but are rising from near zero today.
Their broader market case turns on AI: strong growth can support high multiples, yet investors are financing future capabilities before meaningful monetization is proven.
They close by framing the U.S.-China AI race as a long-term contest over innovation, capital flows, corporate wealth and reserve-currency power.
Featuring
Amazon.com, Inc.
Alphabet Inc.
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