u/w3_vic

The 30-year Treasury yield just pushed above 5.3%, its highest level in nearly two decades.

Everyone keeps focusing on whether the Fed cuts, holds, or hikes next.

But I’m starting to wonder if that’s becoming less important for markets than what’s happening further out on the curve.

If long-term yields stay elevated because of deficits, Treasury supply and investors demanding more term premium, the Fed could eventually cut and borrowing costs might still stay pretty high.

That feels like a very different setup from the last decade.

And for stocks, especially anything trading at a high multiple, I’m not sure the market is fully pricing that in yet.

Maybe strong earnings can keep offsetting it for a while, but if 4.5–5% long rates become normal rather than temporary, I’d expect valuation multiples to matter a lot more again.

The 30-year Treasury yield just pushed above 5.3%, its highest level in nearly two decades.

Everyone keeps focusing on whether the Fed cuts, holds, or hikes next.

But I’m starting to wonder if that’s becoming less important for markets than what’s happening further out on the curve.

If long-term yields stay elevated because of deficits, Treasury supply and investors demanding more term premium, the Fed could eventually cut and borrowing costs might still stay pretty high.

That feels like a very different setup from the last decade.

And for stocks, especially anything trading at a high multiple, I’m not sure the market is fully pricing that in yet.

Maybe strong earnings can keep offsetting it for a while, but if 4.5–5% long rates become normal rather than temporary, I’d expect valuation multiples to matter a lot more again.

The number that surprised me wasn’t the ~$750B in capex. It was capex getting close to 100% of operating cash flow.

These companies used to be able to fund huge investments internally without really stressing the balance sheet. Now debt is becoming a much bigger part of the equation.

AI demand still looks strong, so I’m not really in the “this is 2000 all over again” camp.

But at some point the market probably has to care more about ROI and free cash flow than how many GPUs/data centers they’re building.

Curious which hyperscaler you think is handling this best.

The number that surprised me wasn’t the ~$750B in capex. It was capex getting close to 100% of operating cash flow.

These companies used to be able to fund huge investments internally without really stressing the balance sheet. Now debt is becoming a much bigger part of the equation.

AI demand still looks strong, so I’m not really in the “this is 2000 all over again” camp.

But at some point the market probably has to care more about ROI and free cash flow than how many GPUs/data centers they’re building.

Curious which hyperscaler people here think is handling this best.