Barron's analyst: rising bond yields could lift stocks as chip ETF slides 20% from peak

what happened

Barron's technical analyst Doug Busch challenges the common view that rising 10-year Treasury yields hurt equities. He argues a durable market bottom, especially in technology and semiconductors, may require yields to climb further, but driven by stronger growth expectations rather than renewed inflation worries. In his view, the recent rise in long-term rates reflects the capital needs of the artificial intelligence investment boom.

According to the analysis, the CBOE 10-Year Treasury Note Yield Index traded near 5.14% on Monday after peaking at 5.36% on October 7. Busch sees the recent short-term yield weakness as consolidation within an uptrend that has held for the past year.

The VanEck Semiconductor ETF has logged nine straight losing sessions, its longest such streak since May 2006, and sits 20% below its 52-week peak. Last week the fund fell 10.5%, its worst weekly drop since the first week of April 2025. Busch sees potential downside toward $475 by year-end, which is his personal view rather than a market consensus. The ETF traded around $548 on Monday.

why it matters

The key point is that long-term yields are rising on expectations of strong growth rather than inflation, which could shape how investors value technology companies. Higher yields typically pressure stocks, so Busch's thesis runs against that usual logic. Additional pressure on the AI trade comes from Chinese memory competition, softer Anthropic financials and a 25% weekly plunge in CoreWeave.

market impact

Semiconductor and AI stocks: the sell-off adds pressure, while long-term yield moves feed into equity valuations.

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