The DeepSeek fallout is so big that it’s hitting macro

The model that most people in the bond market are using is this:

1. AI is disinflationary
2. But first there will be massive spending on chips and power to build it, creating near-term inflation

Well the second-leg of that thinking took a big hit from DeepSeek, as it shows that training AI is more technique than power. Since the open sourced it, others will piggyback on the technique and perhaps refine it even more.

So that big spending bump is now in question and the lower cost could make AI even-more ubiquitous.

Now obviously layered on that today is a huge flight to safety with tech getting crushed but this move could also mark a top in yields. This might be your last chance at 4.50% for 10 years for awhile.

This article was written by Adam Button at www.forexlive.com.