The reaction function of US tech stocks to interest rates has become significantly asymmetrical—the magnitude of the rise triggered by declining yields is approximately three times the magnitude of the fall triggered by rising yields. This means that market pricing in interest rates has become "one-sided": negative news is muted, positive news is amplified, and tech stocks are absorbing more and more risk exposure. Low breadth is a classic characteristic of bubble accumulation, "usually not stopping until the bubble bursts." Funds unwilling to bet on a narrow AI and tech-led growth structure are facing increasing underperformance risk. The divergence between the interest rate and tech sector reaction functions means that "resilient tech" stocks during a yield-rising cycle rely on a single narrative; once the AI narrative falters, the lack of breadth means weak support.
