London-based credit hedge fund Andromeda Capital Management said that rising global government bond yields are posing a growing threat to the corporate bond market. Alberto Gallo, head of investment and co-founder of the company, said that the US government is trying to keep the dollar strong and reduce US Treasury yields without balancing the budget or reducing debt. He said, however, that the scale of public borrowing is huge and the deficit continues to expand, making this practice unsustainable. “We either have to increase long-term yields; this could lead to a credit crunch, especially when the AI sector borrows so frequently, or we have to depreciate the currency,” Gallo said. “With government bond yields so high, we've probably hit some icebergs,” Gallo said, likening the situation to the Titanic disaster.

London-based credit hedge fund Andromeda Capital Management said that rising global government bond yields are posing a growing threat to the corporate bond market. Alberto Gallo, head of investment and co-founder of the company, said that the US government is trying to keep the dollar strong and reduce US Treasury yields without balancing the budget or reducing debt. He said, however, that the scale of public borrowing is huge and the deficit continues to expand, making this practice unsustainable. “We either have to increase long-term yields; this could lead to a credit crunch, especially when the AI sector borrows so frequently, or we have to depreciate the currency,” Gallo said. “With government bond yields so high, we've probably hit some icebergs,” Gallo said, likening the situation to the Titanic disaster.