The Next Financial Crisis Isn't In AI, It's In US Treasuries | Russell Clark

Summary

Russell Clark, hedge fund manager, argues that the US Treasury market is a larger speculative bubble than AI, driven by a political shift toward wage growth, full employment, and reduced foreign demand for US debt. He predicts the 10-year yield will reach 10%, gold will benefit from a move back to hard assets, and semiconductors will remain elevated as AI capex acts as defensive moat-building. He warns that private credit, private equity, and listed asset managers are mispricing the risk of structurally higher rates.

• US 10-year Treasury yield could hit 10% as political push for wage growth, heavy spending, and falling foreign reserve demand erode the bond market.
• Gold is set to rise as central banks shift reserves back to hard assets after the freezing of Russian reserves.
• Semiconductors are the new oil; AI capex is defensive spending by Big Tech to protect moats, unlikely to be cut, supporting chip prices.
• Private credit and private equity are built on low-rate models and face severe headwinds; listed asset managers are particularly at risk.
• Japanese government bonds are a leading indicator of the global bond sell-off and yields will continue to rise.
• Triple-levered single-stock ETFs are dangerous products that tend to hurt retail investors when unwinds occur.
• High-end real estate markets like London have already stagnated nominally; broader housing is likely to follow as rates stay elevated.