Taiwan's stock market has fallen sharply for several consecutive days, driven by a rapid rise in global bond yields rather than the end of the AI rally — short-term bad news for investors holding tech stocks, but not a bursting bubble.

• The US 10-year Treasury yield is approaching 5%, its highest level since 2023, as institutional investors sell equities and buy bonds to reallocate their assets.
• The fundamental reason bond interest rates are rising is that debt deficits in developed countries have spiralled out of control, and investors are demanding higher returns before they will lend to governments.
• US producer prices came in higher than expected, conflict in the Strait of Hormuz has pushed oil prices above US$100, markets are betting the Federal Reserve will raise rates next week, and the European Central Bank has already raised rates by one notch.
• Expectations of a rate hike by the Bank of Japan have pushed the yen higher, triggering the unwinding of carry trades worldwide and adding to selling pressure on tech stocks.
• TSMC, MediaTek, Hon Hai and Delta Electronics all declined, with the Taiwan index losing the 47,000 level and then falling below the 46,000 mark; trading volume shrank and more than 1,300 stocks fell.

Outlook: Analyst Weng Wei-chieh believes there is no risk of the AI bubble bursting, and that Taiwan stocks should trade in a high, volatile range above 40,000 from here — but as long as long-dated yields keep climbing, tech stocks will face the greatest pressure.