Bonds, AI, and a bull market that has kept going

The bull market remains intact because Treasuries retain their safe-haven role, credit markets are disciplining weaker borrowers, and AI demand continues to expand despite concerns about investment returns.

• Treasury yields reversed course and rallied as Middle East concerns intensified, while contained inflation expectations and a strong US dollar challenged the view that investors had lost faith in US assets.
• Credit spreads widened for CoreWeave and other neocloud companies, but the author interprets this as healthy discrimination against highly leveraged businesses with uncertain cash flows and heavy capital needs.
• Anthropic showed rapid commercial adoption and lower inference costs, OpenAI continued to grow its enterprise business, and Meta Platforms reported AI benefits in advertising, recommendation engines, and advertiser tools.
• Meta’s Muse AI assistant reached 10 million users in the US and Canada within six weeks, with approximately 25% using it daily; Anthropic reported third-quarter revenue of $16.8 billion, up 45% from $11.6 billion in the second quarter.
• The annualized revenues of OpenAI and Anthropic rose from approximately $30 billion at the beginning of 2026 to $105 billion by late summer, while the cost of achieving fixed performance across five AI benchmarks fell approximately 47% per quarter since 2023.

Takeaway: Investors should not equate selective credit stress or the very large capital required for AI infrastructure with the end of the bull market, although Middle East tensions, higher oil prices, inflation, and uncertain returns on AI spending remain material risks.