On Monday, the Nasdaq 100 rose 1.2%, the S&P 500 increased 0.4%, and the semiconductor index ended an eight-day losing streak. Amazon rose 5%, SanDisk rose 5.5%, and SK Hynix rose nearly 5%.
It looks like "risk appetite is back."
Looking further down.
The credit spreads related to hyperscale cloud computing have risen to historic highs. CoreWeave's five-year CDS spread broke through 1000 basis points, with some bond yields surging above 15%, entering the pricing range of "distressed debt." Goldman Sachs directly stated: AI credit spreads have widened to the widest level this year; the last time they reached this level, related stocks were about 15% lower than now.
Stock investors are betting on the continuation of the AI narrative. Bond investors are pricing in the leverage risk of AI infrastructure. The two markets are speaking completely opposite languages.
What’s more painful is that no one is really placing bets.
Goldman Sachs trading desk rated the market activity that day as 3/10. Long-term funds bought consumer and financial stocks, while hedge funds net sold technology, media, and telecom. The speed at which hedge funds are reducing tech stocks is the fastest since at least 2016.
Stock prices rose, but the smart money is exiting.
The signal is even clearer when transmitted to crypto.
BTC is struggling around 81,000, with 83,000 repeatedly resisted. The Coinbase premium index has been negative for 20 consecutive days, currently at -0.1398%, with US buying continuously absent. Last week, US spot Bitcoin ETFs saw a net outflow of $228.6 million, and IBIT had a weekly outflow of $165.5 million. ETF funds are withdrawing, US buying is shrinking, and the crypto market lacks an independent narrative.
It is waiting for the traditional market to finish the "credit pricing" internal battle first.
Crude oil at $103, 10-year US Treasury yield at 5.14%, these two numbers weigh heavily above, leaving no room for easing in risk assets.
The Nasdaq rise is sentiment; the widening credit spreads are fact. When the two clash, trust the bond market—because borrowers fear death more than stock buyers.
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