"Growth Shock": When The AI Trade Sneezes, Bonds Now Rally, And BofA Has A Hedge For It

For much of the year, every AI scare came with a side order of higher yields. Not anymore.

Two weeks ago, BofA's derivatives team argued that the AI bubble will burst with stocks AND yields tumbling, based on the market's reaction to the OpenAI revenue scare. Last Thursday provided an even cleaner test case. Per the team's latest Global Equity Volatility Insights note, "The age of idiosyncratic risk" (available to pro subs), 10-year yields dropped more than 16bps on Oct 22 as the Nasdaq declined nearly 3%: