Moody's: Stocks Quietly Rewrote Themselves Amid Global Turmoil
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- Moody's Ratings says markets have already adjusted to the new economic world order, with government yields rising across most advanced economies and investors moving away from riskier corporate debt
- Atsi Sheth, Moody's chief credit officer, declared the post-2008 era of low inflation and cheap borrowing "over," replaced by geopolitical uncertainty, higher deficits, and demographic shifts
- Software stocks have fallen this year as AI demands massive capital expenditure from hyperscalers, while energy has surged on the Iran war and semiconductors have rallied as the picks-and-shovels of the AI boom
- The 30-year U.S. Treasury yield has traded above 5% for the longest period since the start of the financial crisis, per Bloomberg
- Investors are still betting on the TACO trade — that President Trump will dial down geopolitical pressure if markets get too hot — though there is no guarantee he will
- Consumer-facing sectors like autos, consumer goods, and apparel are struggling as higher prices squeeze shoppers, masking the surface-level calm of the indexes
Why it matters: The headline-grabbing index masks a deep rotation: software and consumer-goods investors absorbed real losses this year while AI-infrastructure and defense-energy plays banked gains. Mortgage holders and taxpayers are now paying the bill for the same government borrowing binge that has kept the 30-year Treasury above 5% for its longest stretch since 2007, per Bloomberg.
