BREAKINGVIEWS — Bonds once again have a license to hedge
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.) By Jon Sindreu LONDON, Oct 16 (Reuters Breakingviews) — As equity markets panicked over CoreWeave and the AI trade, fixed income rallied. Meanwhile, US 10-year Treasuries' correlation with oil has gone from minus-60% to positive. Government bonds, which may have become oversold of late, can once again act as portfolio ballast. Full view will be published shortly. Follow Jon Sindreu on X and LinkedIn. Context News Shares in large technology companies sold off on October 15 as investors questioned the economics of the AI boom. Shares in CoreWeave, the heavily indebted data centre operator, tumbled and were down 28% relative to the start of the week at one point during the day. They later rebounded when Nvidia CEO Jensen Huang spoke at a Bloomberg event and touted CoreWeave’s financial strength. CoreWeave is a customer of Nvidia, which in turn holds an equity stake in it. Meanwhile, global bonds rose in value. As of 0830 GMT on October 16, 10-year government-bond yields in the US, the United Kingdom and Germany traded at 5.0895%, 5.3689% and 3.42156%, respectively, compared with 5.2440%, 5.4457%, 3.
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.) By Jon Sindreu LONDON, Oct 16 (Reuters Breakingviews) — As equity markets panicked over CoreWeave and the AI trade, fixed income rallied. Meanwhile, US 10-year Treasuries' correlation with oil has gone from minus-60% to positive. Government bonds, which may have become oversold of late, can once again act as portfolio ballast.
Full view will be published shortly. Follow Jon Sindreu on X and LinkedIn. Context News Shares in large technology companies sold off on October 15 as investors questioned the economics of the AI boom. Shares in CoreWeave, the heavily indebted data centre operator, tumbled and were down 28% relative to the start of the week at one point during the day.
They later rebounded when Nvidia CEO Jensen Huang spoke at a Bloomberg event and touted CoreWeave’s financial strength. CoreWeave is a customer of Nvidia, which in turn holds an equity stake in it. Meanwhile, global bonds rose in value. As of 0830 GMT on October 16, 10-year government-bond yields in the US, the United Kingdom and Germany traded at 5.0895%, 5.3689% and 3.42156%, respectively, compared with 5.2440%, 5.4457%, 3.4608% at the end of the previous week.
Lower yields indicate a higher price. On October 15, official data for the United States showed the producer-price index rising 1.3% in September. This compared with a 0.5% increase in August, marking the fastest monthly pace of wholesale inflation since March 2022. (Editing by Liam Proud; Production by Streisand Neto) ((For previous columns by the author, Reuters customers can click on SINDREU/ mailto:Jon.Sindreu@thomsonreuters.com)