AI is driving up Treasury Yields (through the crowding out effect)
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Alphabet, Amazon, Meta and Microsoft now have $2.4 TRILLION+ in future off-balance-sheet commitments, according to the WSJ. These aren’t hidden debts, but largely long-term commitments for data centers, energy, servers and compute capacity. The key point: a significant part of future AI spending is already locked in. That creates enormous momentum across the AI ecosystem — from Nvidia and Broadcom to memory, data centers, power equipment and utilities. It also accelerates the financialization of AI infrastructure: long-term Big Tech contracts can support debt, private credit and potentially securitization. ✅ Short term: this makes an abrupt AI capex slowdown less likely. ⚠️ Long term: it raises the stakes. If AI revenues fail to justify these massive commitments, overcapacity, falling compute prices and refinancing stress could turn today’s financial accelerator into tomorrow’s vulnerability.
~$2tn deficits, sticky inflation, heavy long-bond supply due to AI-fueled corporate borrowing are lifting term premia as traditional demand fades. Even softer data can't stop the selloff. Source: HolgerZ, Bloomberg
Source: Lance Roberts The Daily Shot

