AI and Crypto Dominate Q3 Returns Amidst Rising Yields

The third quarter of 2023 has been marked by mixed returns on Wall Street. The S&P 500 saw about 5.3% gains, while the Nasdaq-100 also delivered around 5% gains. However, the Dow Jones lost about 0.1%, and the small-cap index Russell 2000 fell by 5.7%. The quarter was dominated by the AI and tech story, as well as a revival in cryptocurrencies.

The iShares 20+ Year Treasury Bond ETF (TLT) has dropped around 8% in Q3 due to rising Treasury bond yields, which hit a 20-year high. The Fed has enacted a 25-bp rate hike in September to combat accelerating inflation, with policymakers also raising their inflation forecast.

In the energy sector, the United States Brent Oil Fund LP (BNO) has added about 50% in Q3, driven by ongoing tensions in the Strait of Hormuz and concerns over Iran's oil shipments. Meanwhile, AI safety concerns have surged, with growing worries over the pace of AI development and its potential risks.

Cryptocurrencies have also seen a significant rebound in Q3, led by Solana (up 87%), Ethereum (up 74%), Bitcoin (up around 42%), and Dogecoin. Chainlink ETFs like Grayscale Chainlink Trust ETF (GLNK) have surged due to expanding spot inflows and strong underlying infrastructure adoption.