AFS Markets Blog: Morning 06/11/2026

• Meanwhile in markets, boy, that escalated quickly. What happened on the Nasdaq hasn’t stayed on the Nasdaq, with a broad risk-off move following the tech index’s worst one-day rout since 2020;

• The Nasdaq closed down 5.5 percent, having come eerily close to triggering the 7 percent circuit breaker during the session. The index now trades at its lowest level since April, firmly in correction territory. In futures trading, we’re seeing a hint of relief this morning, but let’s see whether that holds until US markets open;

• Punters have been scared out of the AI trade, which had already been losing steam since early October. But the dam finally burst as the hangover from the Democrats’ midterm victory really started to set in yesterday. The greatest fear with the Dems taking power – not just in Congress but at the state level too – is that it will lead to a slowdown in data center expansion, the very trend equity markets have been thriving on. Take newly Blue Texas, for example, where the governor-elect ran on a platform of regulating data centers. Overnight, she stated that Texas needs to stop working with data center developers until the necessary protections are in place. Given that around 20 percent of all new data center construction in the US is taking place in Texas, the move is set to have a major impact;

• Shifting to broader markets, Asian equities are under heavy pressure this morning, with the Nikkei dropping six percent and slipping into bear market territory. That is still child’s play compared with South Korea’s Kospi index, which has now lost nearly half of its value since June. Our own AI index – comprising hyperscalers and chipmakers – now trades 25 percent below its October peak. Looking across our AI trade dashboard, which tracks more than 20 companies that have thrived on the trade, hardware names have taken the brunt of the beating this week, down around 20 percent on the week;

• Moving to credit markets, where the stress in AI names has also become clear. Here, the brunt of the pain is being borne by hyperscalers, but also by names such as Intel and Micron. Still, the real punching bags remain debt-funded data center players such as CoreWeave and Oracle, with the former’s bonds now trading deep in distressed territory;

• Turning to broader markets, US Treasury yields are holding near yesterday’s lows, with the 10y yield having fallen nearly 10bps from its peak, while Bund yields are down 3bps across the curve this morning. The fear of the AI bubble having burst has actually seen terminal rate pricing for the ECB and FOMC fall to a hair below 50bps of hikes, with a 25bps hike no longer fully priced in by the January/February meeting for either central bank. In FX, EURCHF is trading at its lowest level since June, at 0.913. Over in energy, Brent crude is back to trading at $100 a barrel;

• Looking ahead, don’t forget that we still have the US labor market report for October coming up, which is expected to show a relatively stable labor market. Besides that, all eyes will be on equity markets today.

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