Guard Against ‘AI Exuberance’ in Credit, HSBC Strategists Say

Credit investors should guard against potential downside risks tied to “AI exuberance” after optimism around the technology helped yield premiums drop to their lowest in decades, according to HSBC Bank strategists.

“In the US, a significant share of recent US GDP growth is tied to AI, whether directly through investment spending or indirectly through the wealth effect from AI-related stocks,” said Song Jin Lee and Tom Russell in a report. “Any disappointment could reverberate through credit markets through several channels.”