Market Trends and Macro Environment - Long-end Treasury yields are rising, driven by fiscal unsustainability concerns rather than inflation expectations, with 10-year Treasury yields at **4.7%** in a nominal economy growing at **5% to 6%** [3][4][5] - Foreign investors show reticence and potential desire to reduce US Treasury exposure, while the administration responds to intense competition for bond dollars from growing budget deficits and AI debt issuance [4][5][6] - The bond market attempts to regulate access to new debt through repricing to higher yields, which may restrain vulnerable economic sectors like housing [6][7] Investment Opportunities and Risks - Rising bond yields and higher rates exert downward pressure on equities, particularly long-duration equities like technology, amplifying concerns over whether AI hyperscalers can achieve revenue levels that justify their spending [10][11] - Portfolio strategies emphasize broad diversification outside the US, particularly in regions like Europe where defense spending drives economic growth and stock performance with lower exposure to the AI theme [11]