Bond market’s big short bet gets wakeup call as AI trade wobbles
This threatens to wrong-foot investors who are heavily positioned for 2026’s bond slump to deepen
US Treasuries are showing tentative signs of reclaiming their traditional role as a haven, potentially surprising investors who have heavily bet on a deeper bond slump in 2026. Concerns over the outlook for leading artificial intelligence firms, particularly Anthropic and CoreWeave, have led to a wobble in the AI trade and a 17 basis point decline in 10-year yields last week.
This trend follows a similar drop in the Nasdaq 100 Index, which dropped 5.5 percent that same week. The bond rally is notable as Treasuries have struggled to provide protection during periods when stocks were struggling. The rally comes as investors sit on unusually aggressive bearish Treasuries bets, raising the prospect of short-covering and increasing the two-way risk in the bond market.
Despite concerns over the AI boom, previous bouts of volatility have proven short-lived, but there are growing worries about emerging cracks in this trade.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
