This interview has been condensed and edited for clarity.

Ellen DiMauro: European sovereigns have been under pressure. At what point do those yields get interesting?

Thierry Wizman: Well, they are interesting. Because they’ve been very volatile.

If you’re thinking of jumping into France, I’d be somewhat cautious. It really depends on how the events are going to transpire over the next few months. But if you’re not the gambling sort, you would want to wait until there’s clarity on the election in France next year.

And if there’s any clarity on any trajectory towards debt sustainability, the budget that’s going to have to be passed by the end of the year is a part of that, but it’s not going to be the thing that determines ultimately what France’s long-term debt trajectory is. That’ll be determined after the election. If there’s an austerity program that’s put in place, it’s not a question of what the yields are, it’s a question of, ‘what do I need to see happen?’ The yields are already very high and they’re already attractive.

Are the hyperscalers crowding out Treasuries and competing with governments for cash?

They’re definitely competing with governments for cash. It’s one reason why the US Treasury is considering reducing the issuance of 20- and 30-year bonds. It doesn’t want to crowd out the issuance of the bonds that are used to finance the expansion of the AI infrastructure economy.

It’s one reason why bond yields have been higher all year. It’s evident in the data on how much issuance there’s been by corporations and it’s slated to continue potentially for another two years based on the CapEx intentions that the hyperscalers have divulged to investors already. So, there’s no doubt there. The answer is yes.

Where are we seeing investors get scared?

It’s not just that the hyperscalers may have over-invested, it’s also that the turn in the political atmosphere in the US is going to turn against the hyperscalers. Politically, not just economics. State and local legislatures [are turning] against data-center construction.

Are prediction markets a better way to play at rates and foreign exchange markets? Are they a way to hedge?

Not if you’re an institutional investor. Because there’s just not that much liquidity in these prediction markets. There are people who are trying to bring liquidity to the prediction markets by entering them and making markets. But the amount of capital that’s being devoted to them is not great enough yet for institutional-size bets.

It’s difficult to look at the price of a prediction market and be assured that if you try to come into that market and buy or sell contracts that you won’t move the price. So, it’s not an easy way to hedge.

It looked like the US Treasuries rallied on news of the Blue Tsunami. What’s your take on that?

Well, there is the possibility that there’ll be less inflation in the US. So there’s three ways that could happen. One way is if the data-center construction slows down. That would depress the economy somewhat because the economy’s been very dependent on data-center construction.

Bond yields could come down simply because the market thinks the economy will slow down a bit under a Democratic victory. Some of the tariffs might be rolled back and that would be disinflationary, something that helps bring down yields. And the final thing is the fact that oil prices are down on the premise that he’s not going to tempt the fates with an attack on Iran. It’s globally disinflationary.

The unemployment rate has ticked up very slightly. How do you see that factoring into moves by the Fed and potential rate hikes?

We’re still at a very low unemployment rate. The Fed is not really concerned about the labor market based on what they’ve said themselves. They’re much more concerned about inflation and inflation expectations right now.

What else are you looking out for post-midterms?

The Democratic agenda is going to be largely about reducing the cost of living. I don’t think they will succeed, but there may be people in the market who think that they will. So if there’s enough people who believe that and it’s in conjunction with maybe Trump reducing some tariffs here and there, the narrative around disinflation can continue.