Even though the AI supply chain and memory sectors have started bouncing back over the past few days, macro risks continue to linger in the background...
The US 30-year Treasury yield has once again broken out to a new high since 2007, hitting a fresh one-year high of 5.3%.
🚗💨 On the way to MBS for that buffet... but wait! The 30-year bond just hit a new high for the year, so we're u-turning straight back to the office! Buffet's cancelled, market panic is served instead 😭📉
Meanwhile, the 10-year Treasury yield is also hovering near its one-year high of 4.7%. This signals that the market is demanding an extra risk premium due to concerns over long-term US inflation, severe government debt, ongoing geopolitical conflicts, and high oil prices.
At the same time, even the tech giants with the strongest cash flows in the entire solar system keep having to issue debt to raise capital. For instance, NVIDIA is helping build a $500 billion financing platform for the illiquid startup Neocloud.
This constantly expanding scale of financing leverage is, in itself, a factor driving up market interest rates. Combine that with the risk-free rate continuing to climb to a nearly 20-year high...
Together, these two forces are creating a massive stress test for the overall US capital market. Risk awareness cannot be ignored right now!
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