Gita Gopinath

Previously, the buyers of US treasuries used to be foreign central banks.

They are not doing as much anymore.

It's mainly coming from non-bank financial institutions from the rest of the world.

And so they're also much more volatile and fleety.

just generally higher volatility in the yield curve.

At least when we look at the pricing in markets, that seems to be the case, especially when it comes to equities.

Everybody wants to have a piece of the AI boom.

And yes, I think there is that sense that, well, this is a sector where we could really see real gains, especially in terms of productivity increases and profitability increases.

And that's going to help.

That's going to be something that they want to be a part of.

So there is that demand for corporate bonds and for U.S.

equity, which is coming again, both from domestic investors, but also from international investors, where AI is the trade.

I mean, that's where all the dynamism is.

And that's where people want to park their money now.

We pointed out all the reasons why rates are likely to stay high.

But I just want to point out that we, since we still have the ongoing Iran conflict and we still have the Strait of Hormuz closed,

If that is not resolved in any time soon, like the next month or so, and you see an even steeper increase in oil prices and crude prices going up to, say, $160 a barrel, which is what some of the projections would be in that case, then we could see much more demand destruction than we are seeing today.

And we could be back in that space where, at least at the short end, interest rates

being cut pretty rapidly.

So both of those are in play right now.