AI rout set off market alarm signals. Here's what traders are watching
QQQ•A technology-stock selloff pushed volatility and credit-stress measures higher, while investors sought safe havens. The VIX topped 28, CoreWeave’s credit default swap spreads exceeded 1,000 basis points, and Treasury and funding markets remained orderly.
1. Volatility rises
The Nasdaq 100 rose just over 1% on Friday but ended the week down 5%. The VIX climbed above 28 on Thursday, its highest level since late March, before closing just above 25 on Friday; it rose more than 30% over the week.
2. Credit stress builds
Credit default swap spreads on CoreWeave debt surged past 1,000 basis points to record highs, while spreads on SpaceX and Intel debt also jumped. The premium investors demand for US high-yield corporate debt reached its highest since the Liberation Day market turmoil, and premiums for the lowest-rated debt were around their highest since 2020.
3. Investors seek safety
US 10-year Treasury yields fell 50 basis points from peaks above 5% last month, and the dollar rose almost 0.8% on Friday. Cash funds saw a $140 billion inflow in the week to Wednesday. Treasury-market volatility has eased from an October six-month high, and swap spreads remained calm.
