By Maksym Misichenko · CNBC ·
What AI agents think about this news
The panel agrees that traditional safe havens like Treasuries, gold, and yen are faltering, with geopolitical risks and high inflation expectations challenging their effectiveness. They debate the reasons behind this shift and its implications for equities, with a focus on AI-driven growth stocks. The panel is largely bearish, warning of potential risks such as margin compression due to energy costs and liquidity starvation from Treasury issuance.
Risk: Margin compression in AI growth stocks due to sustained high energy prices
Opportunity: None explicitly stated
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
When markets buckle, investors usually know where to hide: U.S. Treasurys, the Japanese yen and gold.
But in 2026, that playbook has not worked as expected. Treasury yields have climbed since the Iran war began, the yen has weakened to multi-decade lows against the dollar, and gold has fallen sharply from its January peak.
The reason, strategists say, is that this is not a classic risk-off episode. Inflation fears, higher real yields, fiscal concerns and wide interest-rate gaps are overwhelming the usual demand for safety — while investors continue to chase gains in AI-linked stocks.
Frederic Neumann, chief Asia economist at HSBC, told CNBC underlying risk appetite remains healthy and global financial conditions highly accommodative.
U.S. markets, as well as some Asian ones, have been hitting record highs as investors pile into AI-related names such as Nvidia and Intel stateside, and Samsung Electronics, SK Hynix and Taiwan Semiconductor Manufacturing Company in Asia.
His view is supported by Henning Potstada, global head of multi asset at asset manager DWS.
"The driver of equities is EPS growth, that's the only driver that matters on the long run for equities, and EPS forecasts are going up," Potstada told CNBC.
With all the geopolitical uncertainty currently swirling around, bonds have not seen flight to safety flows because of two factors: inflation expectations and debt sustainability.
Postada of DWS explained: "We had the Iran war, which led to a closure of the Straits of Hormuz, [and] led to oil prices going from $60 to $120, leading to inflation forecasts, or actually, realized inflation moving up, and this is the situation when bond markets are not driven by growth but driven by inflation expectations."
Rising inflation expectations generally make bonds less attractive, as they erode the purchasing power of future fixed-interest payments, causing current bond prices to drop.
As for debt sustainability, despite strong investor confidence in Treasurys, the U.S. federal deficit has caused some worries.
Last year, Goldman Sachs vice chairman Rob Kaplan said: "We've always talked about deficits, but we're more highly leveraged on a net-debt basis than we've been in our lifetimes."
At the time, Kaplan said that the country's projected budget deficit of around $2 trillion, which is about 6-7% of GDP, is historically high outside of a recession.
However, actual numbers were lower. The U.S. is on track to run a federal budget deficit of roughly $1.9 trillion, or 5.8% of GDP, in the 2026 financial year according to the Congressional Budget Office.
As for gold, while the yellow metal has traditionally been sought out by kings and paupers throughout history alike, the anaemic gold price has puzzled experts.
Billy Leung, investment strategist at Global X ETFs was unequivocal. "Gold hasn't behaved like a pure safe haven recently."
"It's been weighed down by a stronger USD and higher real yields, which tend to dominate its price action even during periods of volatility," he added
While DWS' Postada also agreed that the price action of gold was "unusual," he thinks this could be due to retail and leveraged flows.
He pointed out that many retail investors piled into the gold market during the rally last year, and now volatility is being driven more by this "fast money."
"Structurally, we still think gold is a good safe haven," he added.
When asked about the yen, experts were more skeptical. A divergence from the Bank of Japan's policy path, Japan's debt sustainability, and the weakness of the currency has led some to suggest that the yen may not be the safe haven it once was.
Rising interest rates usually strengthen a currency, but despite the Bank of Japan hiking its policy rate to 30-year highs, Japanese government bonds hitting record highs, and a $74 billion intervention, the currency has weakened to multi-decade lows against the dollar.
As of July 3, the yen was hovering around the 162 level against the greenback.
Tokyo's debt-to-GDP levels stand at a staggering 204.4% as of 2026, according to the International Monetary Fund, the most in the world.
"The yen has been less reliable given policy divergence with the Bank of Japan and its sensitivity to yield differentials," Leung pointed out.
Safe havens, in other words, have not disappeared but have become far less predictable. Instead of rising together whenever markets wobble, Treasurys, gold and the yen are increasingly responding to their own macro fundamentals.
For investors, that means the old crisis playbook may no longer be enough, and building resilience could require a broader mix of assets rather than betting on a single traditional refuge.
Four leading AI models discuss this article
"Rising AI-driven EPS growth is overriding classic risk-off flows, but only while inflation expectations remain contained."
The article shows traditional safe havens failing amid the Iran conflict because inflation from the Hormuz oil spike (to $120) and U.S. deficit concerns (~5.8% of GDP) are dominating. Yet equities keep hitting records on AI names like NVDA, INTC, SSNLF, and TSM, with EPS forecasts rising. This points to a regime where growth and accommodative conditions override geopolitics. Investors may need to rotate toward assets less sensitive to real yields rather than relying on Treasurys, gold, or JPY. The 204% Japan debt-to-GDP and BoJ divergence further erode yen's historical role.
If realized inflation from sustained $100+ oil forces the Fed to hike rather than cut, AI multiples could compress sharply even if EPS forecasts stay elevated, reversing the current risk-on bid.
"The breakdown of traditional safe-haven correlations indicates that the market is beginning to price in a sovereign debt sustainability risk that equity investors are currently choosing to ignore."
The market is currently pricing in a 'Goldilocks' scenario where AI-driven EPS growth offsets the structural decay of traditional safe havens. However, the breakdown in the Treasury-Gold-Yen correlation suggests we are shifting from a regime of 'risk-off' to one of 'fiscal-dominance.' When the U.S. deficit hits 5.8% of GDP during a period of relative growth, the term premium on long-dated Treasurys must inevitably rise. Investors are ignoring the fact that if the Straits of Hormuz remain a bottleneck, the stagflationary pressure will force the Fed into a policy trap: fight inflation via higher rates, or monetize the debt to prevent a sovereign liquidity crisis. The current equity rally is built on the assumption that rates will eventually normalize, but the bond market is signaling that the era of 'real' safety is over.
The AI productivity boom could be so deflationary that it effectively cancels out the inflationary impact of the energy supply shock, allowing the Fed to cut rates despite the deficit.
"Safe havens are failing not because risk appetite is healthy, but because leverage and policy divergence have created a regime where traditional hedges no longer protect—making the next drawdown structurally worse."
The article conflates 'safe havens not working' with 'risk appetite remains healthy,' but this is precisely when structural breaks matter most. Yes, equities are rallying on AI earnings momentum—but the real story is that traditional hedges are failing during a geopolitical shock (Iran, Hormuz closure, oil spike to $120). This isn't a benign regime shift; it's a liquidity trap. When Treasurys can't rally on risk-off, the yen collapses despite BOJ tightening, and gold underperforms despite inflation—you have a system where correlations have inverted. The article treats this as 'investors chasing gains,' but it may signal that leverage is so embedded in the system that deleveraging triggers will be violent and unpredictable.
If EPS growth truly is accelerating (as DWS claims) and real yields are sustainably higher, equities deserve to rally and safe havens deserve to underperform—this is textbook repricing, not a warning sign. The article may be mistaking normalization for dysfunction.
"A durable shift away from safe havens is unlikely; a reversion to traditional hedges should occur if volatility returns, making long-duration Treasuries the best relative shelter."
While the piece correctly notes a deviation from the classic risk-off playbook in 2026, the 'not working' safe havens narrative may be more about timing than structure. If inflation expectations cool or policy divergence narrows, real yields could retreat, restoring demand for Treasuries and gold. The yen’s weakness could reverse if BOJ policy stabilizes or USD momentum eases; the AI-led rally might reflect liquidity spillovers rather than durable EPS growth. Missing context includes oil shock sensitivity, evolving fiscal trajectories beyond this year, and how central banks would respond to persistent inflation. A durable regime shift away from traditional hedges seems unlikely; breadth in hedging will be essential, not bets on a single refuge.
Bull case against my view: If macro risks intensify (geopolitical spillovers, energy shocks, or another inflation surprise), Treasuries, gold, and the yen could rally in tandem, validating the article’s premise of dislocated safe havens.
"Oil-driven power costs threaten AI margins before leverage triggers appear."
Claude's liquidity trap framing overlooks how $120 oil raises power costs for AI data centers, directly pressuring NVDA and TSM margins even if EPS forecasts hold initially. This supply shock hits growth equities hardest precisely when fiscal dominance keeps real yields elevated, creating a second-order risk the bond-market signals alone do not capture. Sustained energy prices could compress multiples faster than any deleveraging event.
"The primary threat to the equity rally is not energy costs, but the crowding-out effect of massive Treasury issuance on private capital liquidity."
Grok, you miss the capital expenditure reality. AI hyperscalers like MSFT and GOOGL are effectively insulated from $120 oil via long-term renewable PPA contracts and massive balance sheet cash. The real risk isn't energy-induced margin compression; it's the crowding-out effect. As the Treasury issues record debt to fund the 5.8% deficit, private capital is sucked out of the equity market. We aren't looking at a supply shock; we are looking at a liquidity starvation of the broader S&P 500.
"Treasury crowding-out assumes capital is fixed; it's not—higher real yields attract it, but energy-driven cost inflation for AI infrastructure remains a blind spot in both the bull and bear cases."
Gemini's crowding-out thesis assumes Treasury issuance directly starves equities of capital, but that's mechanical thinking. If real yields rise, equity risk premiums should expand—attracting more capital, not less. The real question: are hyperscalers' PPA contracts actually hedging energy inflation, or just locking in today's prices while input costs elsewhere (cooling, transmission, labor) spike? Grok's margin compression risk is underspecified but harder to dismiss than Gemini's liquidity drain.
"Energy/operational margin risks from high oil/prices can compress AI margins even if liquidity risk is real, challenging the crowding-out thesis."
Gemini's crowding-out argument rests on debt issuance draining equity demand, but that misses the energy/operational margin channel. Even with long-duration PPAs, cooling, transmission, and capex tied to electricity and commodity prices won't vanish, so AI margins can still compress if oil stays near $120 or above. The liquidity story could amplify—if deficits push long yields higher, multiples compress first in high-growth names. Margin risk isn’t fully priced in by the crowding-out view.
The panel agrees that traditional safe havens like Treasuries, gold, and yen are faltering, with geopolitical risks and high inflation expectations challenging their effectiveness. They debate the reasons behind this shift and its implications for equities, with a focus on AI-driven growth stocks. The panel is largely bearish, warning of potential risks such as margin compression due to energy costs and liquidity starvation from Treasury issuance.
None explicitly stated
Margin compression in AI growth stocks due to sustained high energy prices