In mid-week bond trading, the U.S. T-bill yields rose to another yearly high. Both the 10-Year (IEF) and 30-year (TLT) bond yields jumped. Markets sold the bond ahead of the 10-year auction. Fortunately, the stronger-than-expected demand caused a small relief rally.
Since June, the unrelenting bond market sell-off has raised debt yields. Nasdaq (QQQ) markets ignored the higher lending costs. Technology investors are betting that AI firms will have no trouble raising debt. For example, Morgan Stanley and Bank of America are raising $60 billion for Anthropic.
Debt markets have no shortage of supply. Skydance sold $52 billion in debt to pay for its Warner Bros. Discovery acquisition. That is a record. Alphabet, OpenAI, Oracle (ORCL), and SoftBank (SFTBY) all sold debt to fund the AI boom.
The U.S. government debt faced weak demand with too much supply. The long-term war in Iran showed no signs of ending. A potential $5,000 check to every American, should the GOP win the midterms, would add another $1 trillion to the country’s debt.
The weak U.S. bond market also lifted yields for other countries. France (EWQ) must cut social spending costs to repay its debt. Poor school conditions caused students to riot. Britain’s bond yields are also at record highs.
Historically, semiconductor stocks sold off when bond yields rose. This time, only Western Digital (WDC) and Seagate (STX) fell by around 10%. Micron (MU) and SanDisk (SNDK) shares are holding on to their gains.
Tech stocks are appearing safe for now, but the panic in bond markets showed no signs of ending.
