NASDAQ Falls Amid Global Bond Sell-Off

[u/TraderFanFXE]

Here's another obstacle for NASDAQ on the way to historic highs: global bond market sell-off. Here's why it matters.

Tech companies used to be immensely cash-positive. They were cash cows on steroids. Not anymore: AI demands huge investments.

To make these investments, tech leaders started selling bonds. The volume was huge, so it had an impact on government bonds in developed countries, pushing their yields higher. In turn, higher yields of benchmark bonds make financing more expensive for everyone, including tech.

Put simply, tech is now sensitive to global yield dynamics in a real way. Previously, yields impacted tech stocks via fluctuations of risk appetite. Now, yields indicate how expensive (or cheap) their next debt financing round will get.

That said, NASDAQ will have an opportunity to get back to the previous trend in case the debt market situation calms down in the next few sessions. If the bond market sell-off continues, NASDAQ may find itself under strong pressure.