AI Anxiety Sends Global Credit Spreads to 17-Month High
WHO:
Bloomberg Markets - The president of Blackstone Inc. said there is no bubble in artificial intelligence.
Bloomberg Markets - Treasury Secretary Scott Bessent said he was not seeing a “systemic problem” in the AI boom.
Bloomberg Markets - Katy Kaminski is Chief Research Strategist at AlphaSimplex.
Jacobin - CoreWeave is described as the largest “neocloud” company; neoclouds provide computing power to AI firms that may not have their own data centers.
Jacobin - Character.ai filed for bankruptcy. Its filing said the company had been losing around $8–9 million per month during the year and that subscription revenue had always been a fraction of its spending on AI computing.
WHAT:
Bloomberg Markets - Wall Street executives’ efforts to calm concerns about AI have not calmed markets.
Bloomberg Markets - Global credit spreads reached a 17-month high, and metrics across global bond markets indicated the strongest risk-off sentiment in more than a year.
Bloomberg Markets - Investors sold AI stocks and sought safe-haven assets.
Jacobin - Bond prices for data-center financing and neocloud companies dropped sharply in recent months; CoreWeave’s bonds entered distressed territory.
Jacobin - Nearly half of bonds raised this year by some of the largest tech firms to finance data-center projects were rated “junk.”
Jacobin - The value traded in credit default swaps linked to major AI firms more than quadrupled between July and September.
Jacobin - A cited Brookings Institution paper estimated that US consumers and businesses would need to spend enough on AI by 2032 to generate $3.5 trillion in revenue—just under 9 percent of US GDP—to justify the investment.
Jacobin - The article says the railroad boom’s capital spending was more than one percentage point of US GDP smaller than the AI build-out.
Jacobin - The Wall Street Journal comparison cited by Jacobin said the required annual AI spending would be roughly equal to US spending on food, or seven times spending on the internet, phones, and other communications.
Jacobin - Apollo’s chief economist pointed to a gap between analysts’ projected future operating cash flow for the tech sector and their projections for other sectors.
Jacobin - Character.ai’s bankruptcy filing reported monthly losses of around $8–9 million and subscription revenue that was only a fraction of its AI-computing costs.
WHERE:
Bloomberg Markets - The risk-off indicators covered global bond markets.
Jacobin - The Brookings estimate concerned spending by US consumers and businesses and US GDP.
WHY:
Bloomberg Markets - A selloff in AI stocks and growing geopolitical tensions contributed to investors seeking safe-haven assets.
Jacobin - Investors were abandoning AI-related debt amid doubts that the firms could repay it; the article cited unprofitability, projected revenue requirements, and losses.
HOW:
Jacobin - Credit default swaps function as insurance against future debt defaults.
Bloomberg Markets - Katy Kaminski discussed the AI trade test in equities and why fixed income remained under pressure.
(UPDATED October 23, 2026 23:18 UTC)
Wall Street’s reassurances about artificial intelligence have failed to calm investors, as markets show growing signs of caution. Global credit spreads have reached their highest level in 17 months, while bond-market indicators point to the strongest risk-off mood in more than a year. Investors have sold AI stocks and moved toward safer assets, amid geopolitical tensions and doubts about whether AI firms can repay their debts. Blackstone’s president said there is no AI bubble, and Treasury Secretary Scott Bessent said he sees no systemic problem in the boom. But borrowing costs are rising: CoreWeave bonds have entered distressed territory, and nearly half of some major tech firms’ bonds for data-center projects were rated junk. Trading in default insurance tied to major AI firms more than quadrupled from July to September.
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(UPDATED October 23, 2026 20:15 UTC)
Global bond markets are showing their strongest risk-off mood in more than a year, with credit spreads at a 17-month high. Investors are selling AI stocks and moving toward safe-haven assets amid geopolitical tensions, while AI-related debt is also under pressure. Bonds tied to data centers and neocloud firms have fallen sharply, and CoreWeave’s debt has entered distressed territory. Nearly half of some major tech firms’ data-center bonds issued this year were rated junk, while trading in default insurance linked to leading AI companies more than quadrupled from July to September. The concerns reflect doubts that AI firms can repay their borrowing or generate enough revenue to justify massive investment. A Brookings estimate says US consumers and businesses would need to spend enough on AI by 2032 to support $3.5 trillion in revenue.