AI Infrastructure Financing Competes with US Debt for Long-Term Capital, Raising Concerns Over Interest Rate Pressure

On August 21, investment in AI infrastructure is becoming a new variable in the US bond market. As tech giants expand data centers, chip production, and computing power, the financing demands of AI companies are rapidly increasing, beginning to compete with the US government for funds from core bond buyers such as insurance companies, pension funds, and long-term asset management institutions.

Data shows that as of August, the issuance scale of US investment-grade corporate bonds has reached approximately $1.7 trillion, setting a historical high for the same period. The four major tech companies in the US have issued bonds exceeding $170 billion this year, surpassing the total for the entire year of 2025. Meanwhile, Broadcom is seeking to provide financing for chips and infrastructure to AI companies like Anthropic, with potential debt size approaching $100 billion.

Market institutions point out that AI is not only increasing the supply of US debt but also expanding the "duration supply" of the entire bond market. When both the government and tech companies increase their demand for long-term financing, and the scale of long-term capital pools is limited, the market may require higher yields to attract buyers. St. Louis Fed President James Bullard previously stated that a capital competition is forming between the US government's financing needs and AI infrastructure development.

Recently, the US bond market has been under continuous pressure, with the yield on 30-year US Treasury bonds rising to 5.34%, the highest since 2007, and the yield on 10-year US bonds rising to 4.7%. A high-interest rate environment may further increase corporate financing costs and affect the market pricing of AI companies through valuation discount rates.

At the same time, signs of weakness have appeared in US consumer data. Walmart's stock price fell about 9% in a single day, marking the largest drop since 2022, due to its same-store sales growth declining to the lowest level in six years, below market expectations, indicating that consumer spending is slowing down.

Against the backdrop of slowing economic growth and persistent inflationary pressures, the Federal Reserve's policy faces a dilemma. The US Treasury recently expanded the scale of long-term US Treasury bond repurchases, raising the single repurchase limit for 10-20 year and 20-30 year US bonds from $2 billion to at least $4 billion. The market believes that this move is more symbolic, providing short-term relief from yield pressure but not changing the long-term supply-demand contradiction.

Analysts believe that the future market focus will concentrate on US fiscal financing needs, the expansion of AI capital expenditures, and the trend of long-term interest rates. If long-term US Treasury yields continue to rise, the market may revisit policy tools such as yield curve control (YCC) or quantitative easing (QE).