Hundreds of billions of dollars are being poured into data centres to train and run the ever-growing suite of AI models. This is where the bond market comes in. US mortgage rates are linked to bond yields, unlike in South Africa where they follow the central bank’s policy rate. The consequence will be even higher long-term bond yields, and a weaker US dollar. This in turn could start putting pressure on elevated equity valuations which, together with the ongoing AI uncertainty, implies market volatility ahead.