AI bubble fears are creating new derivatives

Debt investors are increasingly concerned about major tech companies taking on significant debt for AI development, leading to a surge in credit derivative trading. This market activity, particularly for single-company contracts on issuers like Meta and Alphabet, reflects a growing demand for protection against potential defaults as AI investments escalate.

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Short-term yields fall on surplus liquidity

Bond yields are diverging, with short-term rates falling due to liquidity while long-term rates rise, signaling the end of the current rate-cut cycle. Institutions are