The FTSE 100 appears to have turned down but the S&P 500 is still in the uptrend. The 34-day BTI is near overbought currently at 355, a move above 400 is overbought and in this case it is a bearish signal. Sometimes the stock market turns down before the 34-day BTI is overbought, this could be the case.
Companies involved in the AI infrastructure build will have to spend vast amount of money, capital requirement is huge, we are talking trillion of dollars over the next several years. Companies will borrow heavily to finance their projects, the demand for financing/capital is so big but investors have a finite amount of money to allocate. This means they will demand higher rates in order to lend. Companies and governments compete for capital, so yields will go up to attract investors.
But the world isn’t actually limited to a fixed amount of money that can be lent. Savings can increase, banks can create credit, foreign investors can provide capital, companies can use retained earnings, and — crucially — central banks can create liquidity. So the question becomes: Can the supply of capital increase quickly enough to meet the enormous increase in demand without pushing the required return higher? Yes it can but this would happen when the central bank intervenes to suppress/contain yields by buying bonds, this provides liquidity and the consequences are greater risk of inflation, and greater risk of currency debasement.
This is why gold is rising, gold can rise with higher yields if investors anticipate that the central bank will intervene to suppress yields.
Meanwhile the enormous amount of money companies will have to borrow and the rise in yields is worrying investors. This should trigger a stock market correction. On the positive side the growth in earnings is expected to continue, for that reason the stock market correction will be short lived.