alt Hacker NewsIt should be expected the Fed will continue to raise rates.
US Producer Prices Up Most Since 2022 as Energy Pain Worsens - https://www.bloomberg.com/news/articles/2026-10-15/us-produc... - October 15th, 2026
CoreWeave Credit Risk Hits Record, Pricing 60% Odds of Default - https://www.bloomberg.com/news/articles/2026-10-15/coreweave... - October 15th, 2026
- The cost of protecting CoreWeave’s debt against default for five years rose by as much as 74.5 basis points to 1194.5 basis points, according to ICE Data Services. That’s the highest intraday level on record with swaps pricing in a more than 60% chance of default within the next five years.
- Meanwhile, some of the company’s bonds declined in the US junk market. Its 9% notes maturing in 2031 fell by about 2.5 cents on the dollar to 80.75 cents as of 11:00 a.m., pushing the yield on the debt to 15.3%, according to Trace. Its 9.25% bonds due 2030 dropped by about 0.75 cents to about 86 cents, pushing the yield to 14.3%. At the same time, some notes edged higher, with its 9.75% notes due 2031 rising 0.125 cents to 80.625 cents.
- “Debt investors are freaked out about CoreWeave’s cost of equity and equity investors are freaked out about its cost of debt,” said Bill Zox, portfolio manager at Franklin Templeton Fixed Income.
CoreWeave's Bonds Turn Distressed, Drawing 'Yikes' from Musk - https://news.ycombinator.com/item?id=50090791 - October 2026
- However, D.A. Davidson analyst Gil Luria, who has referred to CoreWeave as “the subprime tranche” of AI, warned on a podcast that the stock could go to zero if the AI funding boom falters and the company becomes unable to pay its expensive debt obligations.
- Luria told Bloomberg Television on Wednesday that CoreWeave was “destroying value at every turn” by borrowing at such elevated rates.
- “If CoreWeave is borrowing at 9% and the best return they can get off of that is a 5% return, it doesn’t matter how much they scale,” he said.
- “Borrowing at very high interest rates in order to build data centers that are increasingly commoditized outside of the hyperscalers may not end up being a good investment,” he continued. “The more leverage we use to build data centers, the more risk we’re bringing into the system.”
Monitor CoreWeave equity and debt pricing to understand where we are in the AI capital bubble cycle.
Replies
Does it really matter to the big players? Aren’t they betting on AI providing super intelligence and therefore providing larger returns than the rates at which they can borrow?
Similar stuff happened with the unsustainable computer-leasing mania of the late 1960s. The president had to get involved so that they would stop borrowing more and more cash. I don’t think they really can stop borrowing if other competitors keep throwing cash on the AI build out. No one wants to be left behind and therefore will continue borrowing - even with the rising rates.
It’s a tough situation for the FED to maneuver.
I'm just waiting for us to hit the ZIRP/NIRP forever stage so I can refi my mortgage
I'm of the belief that the Fed raising rates won't do much at all. There's no reason to believe that raising rates will combat inflation coming from oil prices that fluctuate based on tweets and bombing, and it seems that at this point Coreweave is dealing with high interest rates not from the Fed raising rates, but because the market is waking up and realizing that there's a hell of a lot of hype in datacenters and that risk hasn't been priced accordingly.