Goldman Sachs on AI Space - FJElite
Price action since mid-October has shown that there is a threshold beyond which Al-related cost-of-capital concerns can threaten the broader growth narrative. Over these past few weeks, this overhang has affected the non-AI landscape, with spreads decompressing (Le., lower rated cohorts underperforming) and correlations moving notably higher. And as our rates strategy colleagues have noted, the past few weeks have also catalyzed a rally in duration as Treasuries served as a hedge amid the risk-off tone.
AI funding concerns, elevated yields, and escalating geopolitical tensions pushed USD credit spreads to break out (wider) from their local range. In the USD market, pairwise correlations of spread changes reached their highest level since the 1Q2026 Iran escalation (Exhibit 1). Meanwhile, sovereign stress in the Euro area has added to the risk-off tone, and EUR credit correlations have similarly risen.
