Bloomberg: "A new anxiety is gripping Wall Street as it bankrolls the vast network of data centers and chips behind the artificial intelligence boom: Early signs suggest that the credit market is approaching the limits of how much more debt it can absorb. One after another, yields are soaring into the double digits on bonds and loans funding the AI infrastructure buildout. Bankers are finding it more difficult to offload risk to insurers and other investors." #economy #markets #debt #ai #ArtificialIntelligence #bonds

CoreWeave's 2031 bonds yielded 15.78% on Oct 15. On Oct 22 a bank lent $NBIS $3.5B at roughly 6.6% to 7.4%. Same industry, same week, about nine points apart. Today's free piece is on who gets cheap money now that capital is the scarce part of AI. Link in the reply.

$META still heavy heading into FOMC today. With the cost of borrowing on the rise we looked at how META have issued a new class on non-voting shares to fuel their AI build out. This and lots more covered below on Between the Candles with @SimpleFXcom

Canary Capital CEO warns the AI boom is already overbuilt, with companies stockpiling GPUs they haven't even installed “Anthropic put out their S1 yesterday. They're frantically trying to get an IPO done while there's still money in the market” “A lot of data centers have been built, and there's actually been an overbuilding of data centers and overbuying of GPUs. And a lot of the large companies are just buying GPUs and they haven't even set them up yet” “They're buying them because they're afraid of potential scarcity. But as far as compute, we have too much compute right now ... I believe there's gonna be some consolidation. A lot of the smaller hyperscalers are gonna have issues”

Bond yields are rising FAST because there's no demand for them. When there's no demand, the same bond gets sold for lower prices whilst promising the same return, hence making the yield higher. Demand is less because of wavering faith in the US being able to act good on those commitments. Why are bonds the default safe haven though ? They're the most liquid asset in the world, and have guaranteed APR, but with demand for bonds wavering we must look to what could be the next highly liquid, secure, and guaranteed yielding store of value..... $ETH !

I cannot overstate just how bullish this is for data centers that haven't sold all of their capacity yet

Fitch Ratings affirmed Broadcom’s long-term issuer rating at A- with a Positive Outlook, citing strong cash generation and AI demand. Leverage is expected to remain below 1.5x EBITDA, although growing off-balance-sheet financing arrangements and customer guarantees introduce additional credit risks. Broadcom is involved in more than $70 billion in lease-financing transactions, including a $43.5 billion residual-value guarantee tied to custom AI accelerator pods. Fitch expects these commitments to add approximately $4 billion to adjusted debt by fiscal 2027 and $15 billion by fiscal 2029. Despite these risks, free cash flow after dividends is projected to exceed $30 billion in fiscal 2026. Custom AI accelerators and Ethernet networking are expected to outgrow Broadcom’s legacy semiconductor and software businesses, while recurring VMware revenue should help maintain operating EBITDA margins above 60%. $AVGO