Indicators across the global bond market are flashing their strongest risk-off signal in more than a year, as a deepening selloff in AI-related stocks and rising geopolitical tensions push investors toward safe-haven assets.
On Friday, spreads on higher-rated Asian corporate dollar bonds widened to their highest level since July of last year, moving in tandem with the broader credit market. The move aligns with a jump in global corporate bond yield premiums, with indexes showing the premium blowing out to its widest since May 2025, reaching as much as 129 basis points.
Growing unease over the pace of debt-funded AI spending is fueling the turmoil, with markets worried that the technology will not generate profits quickly enough. The sharp unwind of AI bets has left prominent investors divided: Citadel's Ken Griffin has warned of a bubble, while Blackstone President Jon Gray said there is no need for concern because demand is "almost parabolic."
Asia's credit market showed weakness from the Friday open. Traders said regional credit default swap spreads widened by about 1.5 basis points to 78, China's technology sector spreads widened by 3 to 5 basis points, and India investment-grade and South Korean credit spreads widened by as much as 3 basis points.
Meanwhile, US Treasuries, viewed as a safer asset, posted their best single-day performance in more than two years, with gains across all maturities. A wave of buying also hit US Treasury futures as traders rushed to close bearish bets and cover shorts.
In addition, the technology stock selloff deepened, with investors flocking to traditional safe-haven assets including the yen and Japanese government bonds. The yen extended its advance to its strongest level in more than a month, while JGB yields fell across the curve.
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