Three major risks hit global markets Wednesday, but one matters more than the others for investors. On Bloomberg’s Daybreak Europe, host Chad Thomas walked through
how President Trump gave Canada three additional days to avoid 50% tariffs, how the market’s pricing in uncertainty around Iran, and how rising U.S. Treasury yields triggered a sharp selloff across Asian tech stocks.
The 30-year Treasury yield has reached its highest level since 2007, while the 10-year sits at a 19-month high. Bloomberg strategist Ven Ram says two forces are driving the move:** enormous AI infrastructure spending** and persistent U.S. deficits. Together, they are increasing competition for capital, raising the risk premium on long-term government debt, and putting pressure on the richly valued technology stocks that benefited most from the AI boom.
Canada Gets 3 Days to Avoid 50% Tariffs #
Derek Wallbank framed the tariff situation with Canada: “Trump delayed tariffs on billions of dollars of Canadian products. There was supposed to be 50% tariffs. Up to the very deadline, it was unknown on both sides whether this would take effect or if there would be a reprieve. The answer came on Truth Social. Sudden reprieve. It is three days long. On those three days we need to come to a deal of some sort.“
Canada has signaled that substantial progress has been made, implying a deal could be announced soon.
Conflicting Iran Signals Keep Oil Near $92 #
The Iran picture is muddier. On Bloomberg Television, Abeer Abu Omar noted the mixed signals: “President Trump says there are no ongoing or planned talks with Iran. Jared Kushner, who has been a very active negotiator, says some talks could be ongoing. There is a little bit of discrepancy in those statements.“
Oil prices reflect that ambiguity, with Brent crude climbing to $88 a barrel as of August 19. WTI is at $85.25 per barrel, up 3.35% in the past month.
AI Spending and Deficits are Hammering the Long End #
The 30-year Treasury yield hit its highest level since 2007, and the 10-year is at a 19-month high. FRED data confirms the move: the 10-year sits at 4.72%, in the 98.8th percentile of its 12-month range, with the 30-year at 5.21% on August 19.
Ven Ram was direct on the mechanism: *“Principally, there are two big drivers. One of them is the *
AI related capex spending, which is the biggest catalyst at the moment. The second one is higher deficit. The U.S. has not tried to wean itself from the idea of higher deficits, and that is feeding through into the long end of the curve as a risk premium.”
This collision is what Mohamed El-Erian has warned about for months: AI infrastructure demand for capital plus Treasury issuance into a deficit creates a supply-demand imbalance.
Why Tech Stocks Are Feeling Higher Yields First #
Winnie Hsu connected the yield move to equities: “ Tech is leading declines. MSCI Asia down 2%, having its worst day in three weeks. KOSPI down around 5%, with tech-heavy gauges in Japan and Taiwan following those declines as well. The elevated yield environment is usually bad for tech stocks because of how these high valuations rely on future earnings, and rising borrowing costs weigh on capex spending.”
A higher discount rate (driven by higher interest rates) compresses the present value of future cash flows, which lowers the value of stocks trading on future growth potential. It also raises the cost of financing hyperscaler capex that has driven sector growth.
The NASDAQ 100 tracker Invesco QQQ Trust (NASDAQ:QQQ) has held up better on the surface, up 16.8% year-to-date and 24.33% over 12 months, but the one-week change of -0.13% hints at the same pressure.
What to Watch #
The immediate tariff and geopolitical headlines could change quickly. Canada has three days to reach a deal, while a breakthrough or escalation involving Iran could move oil sharply in either direction. The pressure coming from the Treasury market may be harder to reverse as investors are demanding greater compensation to hold long-term government debt.
That combination has pushed the 30-year yield to its highest level since 2007 and raised the discount rate applied to future corporate earnings. Technology fundamentals remain strong, and the VIX shows little sign of panic, but if long-term yields stay near these levels, expensive AI and semiconductor stocks could face a much broader valuation reset.
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