As the United States Treasury continues to expand its financing, the pressure on the bond market has not pre-empted the business. As AI investment in infrastructure warms, large technology companies are accelerating their debt, and part of the capital is shifting from United States Treasury to corporate debt, thus placing new upward pressure on United States debt return.

There's a remarkable acceleration in corporate debt issuance.

Fortune quotes from the market people ' s point of view that supermassive cloud service providers are still providing significant financing for the procurement of chips, the construction of data centres and the laying of related infrastructure. The size of the United States Treasury debt has reached $40 trillion, and the budget deficit for the current fiscal year is expected to be close to $2 trillion, with annual interest expenditure of approximately $1 trillion.

The United States Treasury Secretary, Scott Becent, recently stated that current corporate debt is very large, with a significant portion of this related to AI investments. Such companies are not very sensitive to the cost of financing because they consider AI ' s investment to be sufficiently high in terms of future returns.

  • As of July, investment-grade corporate debt issues for the year were about $1.7 trillion
  • About 27% faster than the same period in the previous year.
  • A year-wide scale or a first breakthrough of $2 trillion

Diversion of funds increases the return on US debt

According to Edward Yardeni, a senior marketer on Wall Street, this round of market adjustment was not primarily reflected in a clear spread of corporate debt, but was more reflected in the rise in the return on US Treasury debt. Financial flows to corporate debt did not enter the United States debt market, and the Ministry of Finance had to accept higher rates of return in order to complete its financing.

By this logic, AI investment booms are “reversely squeezing” United States Treasury debt through business financing channels. If the rate of return continued to rise, the interest expenditure of the United States Government would increase and the pressure on the deficit would increase and further boost future debt demand.

There are other pushers outside of AI.

It was mentioned that the upward trend in the United States debt was not driven by AI alone. The widening fiscal deficit, the rise in oil prices as a result of the war in Iran, and the support of inflation for the resilience of the United States economy are factors that the market is already trading.

Yardeni notes, however, that over the past year, private sector investors abroad have purchased net United States corporate debt on a larger scale than their net United States Treasury debt. Jurrien Timmer, Global Macro Manager of Fuda, also stated that this “reverse squeeze” of the corporate debt market has attracted high-level attention from the United States Treasury Department.

The market is starting to show fatigue.

In addition to open bond markets, private credit is also financing AI expansion. It has been reported that the so-called “hidden borrowing” has grown rapidly, even using its own balance sheet to support AI transactions, with statistics reaching $165 trillion.

The Standard & Poor ' s global reminder last month was that markets began to show fatigue when they absorbed large amounts of debt in a short period of time. The report notes that the spreads currently paid by super-large cloud manufacturers are higher than before and that some investors are wary of the speed at which these issuers, whose cash flows were stable, are increasing.