Key facts
- The Nasdaq 100 ended the week to Friday, November 6 down 5% despite a gain of just over 1% that day.
- The VIX closed at just over 25 on Friday, November 6, after rising above 28 on Thursday, November 5.
- Five-year credit default swap spreads on CoreWeave debt rose past 1,000 basis points to record highs.
- The premium investors demand on US high yield corporate credit rose to its highest since April 2025, per the report.
- US 10-year Treasury yields fell 50 basis points from peaks above 5% reached in October.
- BofA's Flow Show report said cash funds drew a $140 billion inflow in the week to Wednesday, November 4.
The Nasdaq 100 rose just over 1% on Friday, November 6, but ended the week down 5% as confidence in the AI trade weakened, Reuters reported on November 9. Traders remain on edge, and investors and regulators are watching market stress indicators that some describe as flashing amber, though not yet red.
Wall Street's VIX index of US stock market volatility rose to over 28 on Thursday, November 5, its highest since late March, and closed at just over 25 on Friday. The VIX rose over 30% in the week to Friday, and the European equivalent hit its highest level since May on Friday. The increase is relatively contained compared with the post-April 2025 "Liberation Day" market jump and the August 2024 selloff, according to the report.
"It's still early days," said Idanna Appio, a portfolio manager at First Eagle Investments. "My concern would be if we see more spikes in volatility, more stress, real issues with the ability to access markets."
The cost of insuring debt issued by neocloud firm CoreWeave rose into distressed territory, with five-year credit default swap spreads, the cost of insuring against a debt default, surging past 1,000 basis points to record highs. Spreads on credit default swaps for SpaceX and Intel also jumped in the week. The premium investors demand to hold US high yield corporate credit rose to its highest since the Liberation Day ructions, and for companies rated CCC or lower it traded around its highest since 2020, according to ICE BofA indices.
US 10-year Treasury yields have fallen 50 basis points from peaks above 5% reached in October, when concerns about high debt, rising inflation and competition for capital as tech firms ramped up bond sales weighed on the market. The dollar rose almost 0.8% on Friday, its biggest one-day jump since June. Three-month euro cross-currency basis swaps, the relative premium for swapping foreign currencies into dollars, briefly touched -8 basis points on Thursday, the lowest since late 2023, and had recovered to around -3.5 basis points by Monday, November 9.
BofA's Flow Show report on Friday said cash funds saw a $140 billion inflow in the week to Wednesday, November 4, the seventh biggest on record. Bond markets showed no signs of the stress seen during the COVID-19 pandemic or around the Liberation Day tariffs, the report said. The MOVE index, which tracks volatility in the US Treasury market, hit a six-month high in October but has since slipped back, and US swap spreads have remained calm.