DO MARKETS BELIEVE IN TRANSFORMATIVE AI?

Summary from the TLDR AI newsletter

Transformative technologies influence interest rates by changing growth expectations, increasing uncertainty about growth, or raising concerns about existential risk. There were economically large and statistically significant movements concentrated at longer maturities for US bond yields around major AI model releases in 2023 and 2024. These movements correspond to downward revisions in expected consumption growth and/or a reduction in the perceived probability of extreme outcomes. It appears the markets do not believe in transformative AI.