IMF Warns of Disorderly Bond Yield Spike as AI Borrowing Builds; DBS CEO Calls Singapore 'Boring' but Stable

In its latest Global Financial Stability Report, the IMF said conditions could deteriorate and flagged the potential for a sharp rise in sovereign bond yields. Government bond yields in several advanced economies have climbed to multidecade highs, driven by higher energy costs from the Middle East conflict and expectations for tighter monetary conditions as central banks try to curb resurgent inflation. The IMF warned last week that global public debt had reached near its highest level since World War II and was on track to soon exceed 100% of GDP. A sharp rise in yields would mark down asset values through higher discount rates, including for AI-related assets, and erode the value of government bonds posted as collateral.

Silvana Tenreyro, economic counsellor and director at the IMF research department, said 'the global economy has been resilient, but that resilience is reaching its limits.' The IMF sees a softer-than-anticipated slowdown in the global economy this year, partly because of the AI investment boom, but it says that same boom is adding to inflationary pressures and financial fragility. The report described a 'large, front-loaded demand shock' in which massive investment is pouring into semiconductors, data centers and power generation before broad productivity gains have materialized.

The IMF warned that if AI productivity gains fail to materialize, U.S. equities could fall 20% and global growth could end up 1.1% below its baseline estimates by 2028, with Asia 1.7% lower.

Against that backdrop, DBS Bank CEO Tan Su Shan described Singapore as open, predictable and 'almost kind of boring.' 'In this huge time of volatility, boring is not bad, right?' she told the DBS Asia Future Forward conference. Tan said Singapore's stability and DBS's regional network could help companies diversify supply chains and pivot between markets as trade and geopolitical risks mount.

Asian tech stocks fell, taking a spillover effect from the U.S., as Samsung Electronics, SK Hynix and Softbank Group all dropped during the trading session, CNBC reported. The decline was mainly due to worries over artificial intelligence financing and intensifying competition denting sentiment. Over the weekend, China's ChangXin Memory Technologies announced significant progress in developing a new chip architecture designed to increase memory density by packing more data into a smaller space.

'Investors are jittery and looking for excuses to take profit on AI-related stocks that have outperformed this year, especially memory stocks,' said UBP's senior equity advisor Vey-Sern Ling. Ling said that while Chinese memory makers can potentially become a threat to the global demand-supply balance over time, they continue to face short-term technology hurdles, especially for more advanced memory like HBM.

U.S. President Donald Trump on Monday defended last week's decision to temporarily ease restrictions on Russian diesel fuel exports after the announcement drew bipartisan criticism. In a Truth Social post, Trump said, 'I made the right choice for the American People — ALWAYS, AMERICA FIRST!' Lawmakers from both parties had raised concerns about Trump's decision to let Russia supply some diesel to the U.S. and global markets for the next six months. A group of seven senators, including four Republicans, said in a joint statement on Sunday: 'The United States should not provide Putin with a financial lifeline while Russia continues to kill Ukrainian civilians.'

Red Bull Racing is now using artificial intelligence to help team staff make critical race-day decisions. The motor racing team and Oracle have developed an AI-powered strategy agent to help engineers interpret Formula 1 regulations and past rulings. Initially designed as a search tool, the system has evolved to recommend actions during races, according to CNBC.