Dan
Small-Fund Manager
AI borrowing is pushing rates up because hyperscalers will pay any price for money, so rates must keep rising until they hurt price-sensitive borrowers. Amazon, Alphabet, Meta and Oracle sold about $194 billion of bonds by early July, 79% more than in all of 2025, and the 10-year yield touched 5.33%, the highest since 2002. Julien Garran warns a downturn may not lower long yields much, with big deficits everywhere while Japan and China step back from Treasuries. x.comÂ
US Treasuries remain unattractive despite retail bond-fund buying: Fidelity's Jurrien Timmer reports end investors accumulating bond funds, while retail buyers risk becoming exit liquidity before the debt cycle capitulates. Rising debt and debt-supply-led inflation are expected to push long-end yields higher even after the midterms. Junk-credit stress adds to the risk of a wider debt-market selloff, leaving bonds a risky equity-crash hedge. x.com x.com x.com x.comÂ
Private-credit-exposed financials look ready to short again after big rebounds, with Manulife, Western Alliance, Banc of California and F&G standing out for their outsized exposure and leverage. x.comÂ
CoreWeave's need for so much cash that it is turning to insurance companies for financing is the worrying signal. CEO stock sales amid scrutiny are less informative because executives sell for many reasons; the source of funding is why the stock remains one to stay out of. x.comÂ
High-yield bonds will be among the first assets sold once private credit blowups force redemptions in mixed mandates, because liquid holdings are always the funding leg. Their resilience amid the private-credit carnage, noted by @yieldsearcher, holds only for now. x.comÂ
Oracle's heavy AI infrastructure debt poses a further credit risk: if downgraded, an estimated $120B of bonds could leave investment-grade indexes and push borrowing costs higher. Its reported 215-bp CDS spread signals stress; CoreWeave's debt rating looks better by comparison. x.com x.comÂ
The Simplify Interest Rate Hedge ETF is arguably the cleanest single-ticker hedge for a long-end rate air pocket, as it pays on both a rate-level shock and a rate-volatility shock. It holds long-dated payer swaptions on 20-year rates, making it long the volatility of duration, and gained roughly 90% in 2022 for that reason. It bleeds carry if the long end chops while volatility compresses, so size it like insurance, and get paid on the dislocation rather than hold through yield caps. x.comÂ
Long-dated US Treasuries face pressure because the market will buy US debt only at 5%-plus yields, with no short-term fix in sight. The 10-year yield keeps climbing parabolically as Washington issues enormous debt to fund deficits, investors demand more compensation for inflation and duration risk, the Fed is now raising rates, and Treasuries must compete harder for global capital. The government seems reluctant to act, while rising oil prices add to inflation pressure. x.comÂ
Long-dated Treasury yields need to stay high because megacap tech companies now compete for bond buyers. Oracle bonds yield over 8%, Meta's over 7%, and Google sold a 10x-oversubscribed 100-year sterling bond above 6%, while hyperscaler issuance is surging from $35B toward $200B. Megacaps are becoming as creditworthy as governments, making this a new paradigm of persistent competition, and Warsh appears to agree hyperscaler debt plays a role. x.com x.com x.com x.com x.com x.com x.com x.comÂ
The secular rise in Treasury yields will likely last longer and go further than most expect, making bets on a yield low premature. Investors tried to time the low in yields from the early 2000s and were 20 years early. The most rate-sensitive sectors, homebuilders, mortgage names and private equity, where smart money would show up first if a turn were near, show no hint of accumulation. x.com x.comÂ