Capital Flows Into Bonds as Safe-Haven Demand Surges

Market Overview

On the eve of the U.S. CPI release, anxiety surrounding artificial intelligence intensified. Deepening concerns that AI could fundamentally disrupt established business models across multiple industries triggered broad-based risk aversion. U.S. equities, commodities, and cryptocurrencies all sold off sharply, while capital flowed aggressively into U.S. Treasuries.

The S&P 500 declined 1.6%, and the Nasdaq Composite plunged more than 2%. Cisco Systems issued weak forward guidance and tumbled 12%. Apple fell 5%, leading losses among mega-cap technology names. The Software ETF dropped 2.7%.

AI-related disruption fears also weighed on transportation stocks. The Russell 3000 Trucking Index slid as much as 9% intraday. Commercial real estate equities posted significant declines.

Treasuries rallied strongly. Yields on both the 10-year and 30-year U.S. Treasury notes fell by more than 7 basis points. The U.S. Dollar Index traded largely sideways, while the Japanese yen extended gains for a fourth consecutive session.

Bitcoin declined 3%, falling below $66,000.

The sharp equity selloff appeared to trigger algorithm-driven liquidation in metals markets. Gold dropped more than 3%, falling below $5,000. Silver plunged 11%. Copper futures declined 3.6%, while platinum and palladium also posted steep losses. Crude oil fell 3%, with Brent briefly dipping below $67 per barrel.

In Asia, the ChiNext Index rose more than 1%, with computing power hardware stocks rallying across the board. However, the Hang Seng Tech Index fell over 1%. Zhipu surged nearly 30%, and MiniMax-WP jumped 15%. The offshore renminbi strengthened past the 6.9 level against the dollar.

Key Developments to Watch1. Bessent vs. Powell？

Treasury Secretary Scott Bessent signaled to Republican lawmakers that he supports transferring the investigation into Federal Reserve Chair Jerome Powell from the Department of Justice to the Senate Banking Committee.

The move appears aimed at persuading Republican Senator Thom Tillis to withdraw his opposition to the nomination of Christopher Waller as Federal Reserve Chair. Tillis has previously stated he would block any personnel confirmations unless the investigation into Powell is rescinded.

2. Precious Metals Face Liquidity Stress

Gold briefly fell more than 4%, while silver plunged 11%, raising questions about liquidity conditions in the precious metals market.

As renewed skepticism emerged over whether massive AI capital expenditures can translate into large-scale economic returns, U.S. technology stocks sold off sharply. Analysts suggest that algorithmic trading systems likely accelerated the selloff in metals.

Some investors were reportedly forced to unwind commodity positions, including gold and silver, to raise liquidity amid broader market stress.

Focus of the Day (GMT+8)

21:30 ET — U.S. January Consumer Price Index (CPI) Release

The inflation report will be a critical catalyst for risk assets, Treasury yields, and Federal Reserve policy expectations.