When stock markets surge higher, hidden dangers in the bond market are often the first to detect risk.
US stocks set new records again this week, with optimism appearing on the surface. However, credit default swap (CDS) prices for AI-related borrowers — including Meta, Google, and Microsoft — are quietly rising, with Oracle showing a particularly notable increase; after SpaceX reportedly sought $40 billion in financing, its CDS prices jumped sharply this week. Meanwhile, the US 10-year Treasury yield has broken through 5%, significantly higher than the previous level of around 4%.
These signals are easily overlooked when market sentiment is high, but history provides precedents. Twenty years ago, rising prices of mortgage-backed bonds and bank CDS were the first to foreshadow the subsequent crisis while stock markets were celebrating. The Financial Times has identified five core issues for investors to assess risks ahead.
AI Revenue Forecasts: Optimism or Bubble?
Tech company earnings expectations are the core support for current market valuations. Torsten Sløk of Apollo points out that analysts currently expect the AI demand surge to drive tech sector operating cash flow to double to approximately $2.4 trillion by 2028.
However, analysts simultaneously predict relatively weak future cash flows for non-tech companies. This raises a key question: who exactly will pay for these AI services? If tech industry customers are too pessimistic, expectations may eventually be met; but if tech companies' forecasts are overly optimistic, the current boom may be nothing more than a bubble destined to burst.
AI Capital Expenditure: Debt Expansion Triggers Crowding Out
The construction of AI infrastructure is spawning an unprecedented wave of debt financing. After exhausting internal resources, tech giants have begun borrowing heavily to support capital expenditure plans. Greg Peters, a senior official at PGIM, recently told the Financial Times that "the scale of debt flooding into the market is historic."
This trend has already begun siphoning funds from other industries. Some financial figures have suggested that the US needs "an institution similar to Fannie Mae to provide financing for AI construction" — essentially repackaging tech debt in a manner similar to mortgage securitization. This concept is unlikely to materialize, but it sufficiently reflects the magnitude of the funding gap.
US Treasury Yields: Fiscal Pressure Becoming Difficult to Manage
US Treasury Secretary Scott Bessent previously maintained the 10-year Treasury yield at around 4% through strategies such as shortening bond issuance maturities, but these measures have shown signs of fatigue — yields have jumped above 5%. Bessent himself insists that AI-driven economic growth will ultimately reduce the fiscal deficit, thereby easing pressure.
The view among many Wall Street figures is that as long as US economic growth remains above 3%, a debt crisis can still be avoided. But shifts in capital flows are making the situation increasingly complex. Brad Setser of the Council on Foreign Relations points out that "East Asia now has massive trade surpluses, but almost none of it is flowing into the US bond market."
Meanwhile, banks have reduced Treasury purchases due to their participation in AI financing. As a result, hedge funds' influence over US Treasury pricing has risen significantly, and they may quickly retreat if market turbulence occurs, further pushing up interest rates. Well-known short seller Jim Chanos warns that "the refinancing risk of old data centers is real."
Oil Price Risk: Geopolitical Conflicts May Push Rates Higher
Energy prices pose another potential threat. The global economy can currently withstand energy price increases from the Iran conflict, but according to a senior Saudi official, current oil inventories are "alarmingly thin," and there is indeed room for further price increases.
Iranian Parliament Speaker Mohammad Bagher Ghalibaf recently stated explicitly on social media that Tehran intends to push up oil prices and US interest rates through blockade actions, creating financial pressure. Financial commentator Jay Martin warns that "Iran cannot confront the US militarily, so it has targeted America's $40 trillion debt."
AI Slowdown: The Cost of the Growth Engine Stalling
Currently, US economic growth remains strong. The latest research from NYU Stern School of Business and DHL shows that global merchandise trade growth in the first half of 2026 was the fastest in 15 years, second only to the post-pandemic rebound period. But 76% of this growth was driven by AI-related trade, and tech investment also contributed a significant portion of recent US growth.
Once the AI boom cools due to rising interest rates, security concerns, or constraints on data center construction, growth momentum will be directly impacted. This also explains why Trump takes a tough stance toward AI critics — the integrity of the AI narrative has become deeply intertwined with the stability of the current macroeconomy.
These issues do not necessarily signal an imminent stock market crash — as the experience from twenty years ago shows, irrational market exuberance can persist for quite a long time. But multiple signals flashing warnings simultaneously means investors can no longer ignore these "canaries in the coal mine."
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