Global Economic Resilience Faces Test as High Rates and Supply Risks Impact Asset Allocation

On October 19, the core contradiction in global markets lies in the fact that the economy still has growth momentum, but the financing costs, energy inputs, and fiscal expenditures necessary to support this growth are all increasing simultaneously. The U.S. fiscal deficit for the 2026 fiscal year is projected to reach $1.992 trillion, with debt interest expenses rising to $1.36 trillion; although the market value of U.S. Treasury bonds held overseas increased by over $83 billion at the end of August, demand for short-term Treasury bills has weakened, indicating that foreign capital allocation is not fully returning. When the government must continuously borrow to repay old debts, the market's risk compensation requirements for long-term debt will directly affect global funding costs.

Investment in AI also shows a similar duality. Economists generally have a positive outlook on the productivity potential of AI over the next decade, but Bank of America estimates that the weighted average cost of capital for ultra-large cloud operators has risen from 4% in 2023 to about 10%, and some data center projects are facing delays and financing challenges. If AI investment begins to cool, corporate financing needs may decrease, and U.S. Treasury bonds may regain their safe-haven function; however, if high capital expenditures continue without corresponding revenue growth, technology companies and related credit markets will face stricter return assessments.

Energy and political risks add another layer of uncertainty. Protests in France reflect the pressure from fuel, housing, and living costs transforming into political risks; the IEA's accelerated release of remaining emergency oil reserves still fails to guarantee a swift recovery of supply chains. The copper market is similarly affected by U.S. tariff policies and strikes at Chilean mines, indicating that the supply of energy and industrial raw materials may still limit the decline in inflation.

For the cryptocurrency market, U.S. Treasury yields, dollar liquidity, and risk appetite will be more important than any single event. If high-yield dollar assets continue to attract funds, risk assets like BTC may face allocation competition; if a slowdown in AI investment triggers a flight to safety and pushes funds back into government bonds, there may still be a short-term deleveraging of risk assets. What the market truly needs to confirm is whether financing costs are beginning to suppress economic demand and whether high interest rates can be maintained without triggering greater financial pressure.

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