AI anxiety drives global credit risk premiums to 17-month high

A sell-off in AI stocks and rising geopolitical tensions triggered the strongest flight to safety in global bond markets in more than a year. Corporate bond yield premiums reached their highest level since May 2025, while U.S. Treasuries had their best day in more than two years.

Indicators across global bond markets point to the strongest flight to safety in more than a year amid a sell-off in AI stocks and rising geopolitical tensions. Investors are turning to safe-haven assets.

According to Bloomberg's index, global yield premiums on corporate bonds widened to 129 basis points, their broadest level since May 2025. On Friday, premiums on dollar-denominated bonds issued by highly rated Asian companies also reached their highest level since last July.

New York Stock Exchange sign

Behind the market volatility is concern that the rapid, debt-fueled spending on AI will not generate profits soon enough. Citadel founder Ken Griffin warned of a bubble, while Blackstone Chairman Jon Gray said demand was "nearly parabolic" and argued that there was no reason for concern.

Asian credit markets opened Friday on a weak note. Regional credit default swap premiums widened by about 1.5 basis points to 78, while premiums on Chinese technology companies rose by 3 to 5 basis points. U.S. Treasury bonds, viewed as a safe investment, gained across all maturities and posted their best day in more than two years.

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