Is the AI rout making bonds safe again?
TLT•Investors moved into government bonds as concerns about AI spending weighed on stocks and credit markets. The US 10-year Treasury yield fell 8.4 basis points to 5.105%, its lowest level in three weeks.
1. Bonds rally as stocks fall
Government bonds rallied despite a hotter-than-expected US inflation report, as investors worried that heavy AI spending may not pay off soon enough and companies could struggle to raise funds at current costs. The 10-year US Treasury yield fell 8.4 basis points to 5.105%, its lowest level in three weeks.
2. Credit concerns build
The cost of insuring some AI-exposed companies against default reached records. CoreWeave, a data centre operator that has issued $22 billion of bonds and $26 billion of loans, was among the companies facing intense selling; its bonds yielded 15%. The Philadelphia Semiconductor Index fell 4.3% on Wednesday, extending its losing streak to six sessions.
