US Treasury Boosts Bond Buys as AI Stocks Plunge

Global financial markets are experiencing significant volatility as the artificial intelligence boom shows signs of overheating. Indicators such as the Shiller price-to-earnings ratio have reached levels reminiscent of the 2000 dotcom bubble, leading to sharp corrections. South Korea's KOSPI index previously plunged 35 percent after record highs in June, and more recently dropped 5.8 percent on August 19. Tokyo's Nikkei 225 also sank 3.2 percent amid AI stock volatility and rising bond yields.

To stabilize markets, the U.S. Treasury Department announced it will at least double its planned purchases of longer-term Treasurys from September 9 through November 4. This move aims to provide liquidity support in sectors with strong market sponsorship. While Asian and European markets faced heavy selling, U.S. indices including the S&P 500 and Nasdaq saw modest gains of approximately 0.2%, supported by the Treasury's announcement and strong profit reports from Target and Estee Lauder.

Other economic pressures persist, including inflation concerns and oil price volatility linked to an ongoing war with Iran. In Australia, the Reserve Bank of Australia warned that the rapid construction of AI data centers is straining national construction capacity, which hinders government housing targets and fuels inflation. Meanwhile, the biotechnology sector saw a surge, with Moderna shares soaring 177 percent following positive results from a co-developed cancer vaccine study.