Svmuu reported that “Cathie Wood” posted on platform X, stating that despite the rise in oil prices over the past three months, the yield curve continues to flatten, and the Federal Reserve has not monetized this energy shock. The bond market may be starting to price in the deflationary effects driven by AI and technology-driven productivity gains. Currently, the cost of AI model training and inference has significantly dropped, productivity growth is accelerating, and unit labor costs remain subdued.
Although the current market narrative is focused on tariffs, deficits, and structurally high inflation, the underlying signals suggest that innovation-related deflationary forces are building. It is expected that inflation could be lower than anticipated over the next 6 to 9 months, which will have profound implications for interest rates and long-duration stocks.