Market Turmoil Driven by AI Bubble Concerns and Risk-Off Sentiment

Both Blackstone Inc. and Citadel commented on the risks associated with the current AI bubble. This sentiment coincided with global bond markets signaling their biggest risk-off period in over a year, driven by AI stock selloffs and geopolitical tensions. Corporate bond yield premiums globally surged to their widest levels since May 2025, reaching up to 129 basis points, while US Treasuries rallied for their best day in more than two years.

Mounting concerns about rapid, debt-fueled spending on AI are causing market turmoil amid fears that the technology will not deliver profits quickly enough. This has prompted a sharp unwinding of AI investments, leading to widening spreads in Asian credit markets and a general flight toward safe-haven assets.