Peter Boockvar on the impact of data center buildout on the stock market: It works until it doesn't

Peter Boockvar, Chief Investment Officer at Bleakley Financial Group, attributes the global surge in interest rates to the Bank of Japan’s 2023 decision to end yield curve control, which removed a long-standing ceiling on global yields. While technical factors like the hedge fund basis trade and mortgage duration extensions have exacerbated recent volatility in the 10-year Treasury, the fundamental drivers remain persistent inflation, rising debts, and a shift away from the era of negative-yielding bonds. Market concentration in AI also poses a structural risk, with 70 to 80 percent of third-quarter earnings growth tied to data center construction and heavily reliant on just two stocks, NVIDIA and Micron. Furthermore, the U.S. faces a critical fiscal challenge as the deficit reaches $2 trillion; with federal spending now at 24 percent of GDP compared to a historical 17 percent revenue average, reining in entitlements like Medicare and Social Security is the only viable path to fiscal stability.