Investors shift to defensive stocks as AI concerns mount, Arkea Asset Management says
TLT•A market analysis highlighted a defensive rotation as investors questioned returns on heavy AI investment. France’s 10-year yield breached 5%, the US 10-year yield settled at 4.99%, and oil rose 6.8% to $108 a barrel by week-end.
1. Market pressures build
A market analysis published October 27 highlighted a defensive rotation as investors questioned returns on heavy AI investment. France’s 10-year OAT yield breached 5%, putting its spread over German Bunds at 174 basis points, the widest since 2011; the US 10-year Treasury yield settled at 4.99% as investors sought protection from uncertainty.
2. Credit and oil
By October 23, European investment-grade credit spreads had widened to 109 basis points and high-yield spreads reached 396 basis points. Geopolitical risk drove oil up 6.8% to $108 a barrel by week-end, reinforcing pressure from persistent inflation.
