Yields on US Treasuries approaching 5% are rapidly tightening global liquidity conditions, with analysts now warning India's ambitious AI infrastructure buildout faces an immediate funding squeeze. The shift, fueled by AI's massive energy demands, oil supply shocks, and sticky inflation, has triggered a structural bear market in US bonds per Jefferies' Chris Wood, driving capital away from emerging markets just as Indian enterprises and hyperscalers prepare record AI capex for Q2FY27.
Executive Briefing • Key Findings
- Core Threat: US 10-year yields near 5% are draining foreign capital from Indian markets, raising borrowing costs for AI data center projects.
- Margin Impact: Rep. of India research flags AI capex plus oil shocks squeezing corporate margins from Q2FY27, hitting tech firms hardest.
- Global Context: Multi-decade high global bond yields are forcing investors to reassess emerging market tech valuations, delaying funding rounds for Indian AI startups.