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Market Incident

Public · Developing

AI compiled from Infoway · 4 analyzed stories

This strategist correctly recommended shorting Big Tech debt last year. Now he says the yields make it attractive.

Big tech companies have borrowed heavily to fund artificial intelligence ambitions. Bonds from investment-grade technology companies have underperformed the broader asset class by 9% this year, the worst in three decades. Bank of America strategist Michael Hartnett now says yields as high as 8% make this debt attractive, reversing his earlier recommendation to short it.

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What happened

Bank of America strategist Michael Hartnett says beaten-down technology bonds may now be worth buying. U.S. investment-grade tech bonds have fallen about 9% this year, and their relative returns versus the broader investment-grade bond index are at 30-year lows. Hartnett had earlier recommended shorting Big Tech debt.

Global impact / market context

Big tech firms borrowed heavily to fund artificial intelligence work. That heavy borrowing helped push their bonds down, which pushed yields up. Higher yields mean buyers get more regular income, so Hartnett now sees the debt as attractive. For ordinary investors, this signals that some professionals see value in a part of the market that has been falling.

What to watch

  1. The roughly 9% year-to-date drop in U.S. investment-grade tech bonds: check whether this loss keeps growing or starts to shrink, because it shows whether the selling pressure is easing.
  2. Relative returns versus the broader investment-grade bond index at 30-year lows: check whether this gap narrows, because it shows whether tech bonds are catching up or falling further behind.
  3. Yields as high as 8% cited by Hartnett: check whether yields stay high, because high yields are the main reason he calls the debt attractive.

Affected assets

  • Amazon long-dated bonds (2076 notes)
  • CoreWeave 2031 notes
  • Galaxy 2031 notes
  • Meta long-dated bonds (2066 notes)
  • Oracle long-dated bonds (2066 notes)
  • SoftBank 2034 notes

Evidence