Treasury Yields Hit 2007 Highs as Bond Rout Halts AI Rally; NVDA Tests $5.7T Valuation

Friday's close marked a sharp inflection in market sentiment as bond investors fled to safety and repriced recession risk sharply upward. The 30-year yield climbed to 5.11%, the highest level since May 2025 according to multiple narrative feeds, driven by oil supply shocks tied to Middle East tensions. Crude surged past $95 per barrel on Brent, feeding inflationThe rate at which prices rise across an economy. expectations that sent equity volatility spiking as growth stocks, particularly mega-cap tech, faced margin pressure from rising real yields. The selloff was synchronized across Japan, Europe, and the US, signaling a regime shift away from the accommodative narrative that had powered the prior three weeks of rallies.

However, the bond rout masked a sharply bifurcated market underneath. On the same day the 30-year yield hit 2007 highs, the US approved NVIDIA H200 chip exports to 10 Chinese companies, reversing a critical trade restriction that had cost the chipmaker roughly 25% of global revenue. NVDA jumped 4.4% on the news, extending a 20% rally over the prior ten days that had added $1 trillion to its market cap and pushed the stock toward a $5.7 trillion valuation. Broadcom, AMD, and Arm all benefited from the export thaw, though the same feed noted a separate narrative of China rejecting US semiconductor exports, highlighting geopolitical whipsaw risk. Cerebras Systems raised $5.55 billion in an upsized IPOInitial Public Offering - a company's first public sale of stock. on May 14, with shares indicated to surge 89% above the listing price, signaling continued conviction in AI infrastructure capex even amid yield shock.

Crypto sentiment shifted markedly positive as the CLARITY Act cleared the Senate Banking Committee 15-9 on May 15, marking the first major US crypto legislation. XRP surged 5.7% to $1.51 on regulatory clarity expectations, while Bitcoin held above $80,000 and Ethereum followed higher. The bipartisan vote de-risked crypto regulation in investor eyes and triggered a broad altcoin rally including Dogecoin and Solana. This represented a sharp contrast to equities, where the bond rout forced margin calls and momentumThe empirical fact that winners keep winning over the medium term. reversals in leveraged tech positions.

Into the Asia open, desks will navigate conflicting cross-currents: inflationThe rate at which prices rise across an economy. shock and real yield repricing argue for defensive rotation and downside pressure on growth; meanwhile, AI capex confirmation via H200 approvals and the Cerebras IPOInitial Public Offering - a company's first public sale of stock. pop suggest selective tech strength persists for semiconductors tied to infrastructure. USD/JPY levels and BoJ commentary will anchor currency flows as Japanese investors reassess carryIncome earned from holding a position over time. exposure given the yield shock. Oil above $95 Brent feeds another round of inflation fears and energy stock strength. Fed speakers next week and the May 21 NVIDIA earnings call loom as critical tests of whether extreme valuations can withstand 5%+ real yields.

The desk's core thesis for the next 12 hours: watch for Asian equity weakness as the bond rout transmits to morning opens in Tokyo, Hong Kong, and Sydney, but monitor semiconductor and crypto strength as tactical hedges. NVDA earnings risk is now binary: if the company delivers capex confirmation, the $5.7T valuation may hold; if guidanceCompany-issued forecasts of future financial performance. disappoints against an inflationary cost backdrop, a 10-20% correction becomes plausible. Real yields above 2.5% may prove a ceiling for equity multiple expansion. Energy and defensive sectors should outperform in the rotation.