Everyone is whining about where the ten-year note is trading. Here is a chart over the last year. All the bigwigs are at Davos again to plan our lives. Citadel’s Ken Griffin, not a rock-ribbed conservative, but not a liberal either, shocked the left-wing press and Europeans when he said it was a relief Biden was not in office. “In one day, everything changed. Now you could concentrate on building your business.”

It’s down from January when Trump took office, but up from the lows. Why is it stubbornly high?

I took a look at a different PPI number. This one is for industrial commodities.

Again, down from 2022, up slightly from 2024.

I took a look at the ISM manufacturing index. Over 50 is an expansion. It’s at 47.7.

CPI is not on fire. Bideninflation is gone. Covidinflation is gone. Supply chains have been repaired after the Covid shocks. Mortgage rates are down at just over 6%.

I asked Grok to look at two things: the trend in factory orders and the trend in public company capital expenditures. My hypothesis was that if both are up, it shows demand rising.

What I found was that factory orders were rising, but dipped in the fourth quarter of last year. It is not as if demand was robust before the drop. It was simply steady.

Factory orders in the US, as measured by the Census Bureau’s Manufacturers’ Shipments, Inventories, and Orders (M3) survey, have shown signs of weakening toward the end of 2025 after a period of relative stability earlier in the year. In October 2025, new orders for manufactured goods fell by 1.3% month-over-month to $604.8 billion, reversing a modest 0.2% increase from September. This decline was driven largely by contractions in durable goods orders, including a 6.4% drop in transportation equipment and smaller decreases in primary metals and electrical equipment. Shipments edged up slightly by 0.1% to $607.0 billion, while unfilled orders rose 0.2% to $1,492.8 billion, indicating some backlog persistence but overall softening demand.

Broader manufacturing surveys reinforce this trend. The S&P Global US Manufacturing PMI for December 2025 indicated the first contraction in new orders in a year, with output growth slowing to its weakest pace in three months amid softer demand conditions. The Institute for Supply Management (ISM) Manufacturing PMI remained in contraction territory at 47.9% in December 2025, marking the tenth straight month below 50, with new orders and inventories shrinking while production barely expanded

CapEx is expanding, though. It’s due to provisions on depreciation and tax cuts that took effect in 2026, or the Big Beautiful Bill the Democrats hate so much. People will see more pay in their paychecks, and if you work overtime or for tips, you get a tax break. That is, except in blue states. It’s also due to investment in artificial intelligence. That will increase demand for debt as companies finance their CapEx from debt rather than cash.

Overall US CapEx investment stands at approximately $3.4 trillion annually, and policy changes like full expensing under the One Big Beautiful Bill Act (2025-2028) are reducing corporate tax burdens, freeing up cash for further investments and potentially boosting GDP growth. The AI supercycle is broadening across sectors, including utilities, healthcare, logistics, and semiconductors, with total AI-related CapEx estimated at $3 trillion over the coming years (less than 20% deployed so far). For example, Chevron announced a 2026 CapEx budget of $18-19 billion, focused on upstream assets like shale and offshore projects.

The last GDP print of 5.3% blew away any estimates. In my lifetime, GDP is generally under 4%. That was a big print.

Trump is not deregulating at breakneck speed. I’d love to see more of that. Faster please. He is deregulating and, more importantly, he put a stop to the socialists who were trying to centralize everything in the Biden Administration. Our thicket of unnecessary government regulations hampers all economic development, hurting the most vulnerable people.

Hence, I do not think the ten-year is stubbornly high because of inflation. I think it is stubbornly high due to demand for debt because the economy is expanding rapidly. We aren’t seeing many layoffs, but we aren’t seeing significant job growth either, because AI is making every single worker more productive. The government also pays a lot of people not to work, so they have no incentive to find something.

I wonder if this supercycle of AI, as it gets rapidly integrated into processes, will be similar to the supercycle we saw with the internet in the mid-1990s.

Anecdotally, I have been in three casinos in the last week, and it has been during the week, not a weekend. They are crowded.