Bank of America Warns U.S. Bond Market Poses Greatest Risk to AI Bull Run Amid 5.2% Treasury Yields

According to Bank of America strategist Michael Hartnett, the U.S. bond market has emerged as the primary source of uncertainty in the current AI bull run, with 30-year Treasury yields rising to 5.2%, the highest since 2007, and real yields climbing to 3%, reaching levels last seen in November 2008. The surge in bond yields is tightening financial conditions faster than corporate earnings improvements can offset, creating a credit crunch for capital-intensive AI operations.

Meanwhile, credit default swap prices for major cloud computing giants have soared to record highs, signaling rising default risk perception, even as tech giants including Google and Intel posted stronger-than-expected earnings but still faced heavy selling pressure. Market sentiment has shifted from questioning whether AI investments will turn profitable to asking who will continue funding the expensive expansion wave.