News Source
EXCERPT:
The market for Treasury debt is challenging to interpret even when the environment is calm, much less when multiple geopolitical and technological disruptions are present simultaneously. Two papers released in the past year offer differing perspectives on a consequential unknown in the current market, which is the expected effect artificial intelligence (AI) will have on future productivity growth.
The first of the two relevant papers, co-authored by Isaiah Andrews and Maryam Farboodi, examined market signals in 2023 and 2024 around the releases of updated AI models from five leading developers (OpenAI, Anthropic, Google Deepmind, xAI, and DeepSeek). A main finding was that the nominal interest rates for long-term Treasury and corporate debt fell after these models became public by a statistically significant 12 basis points.
