Data compiled by Bloomberg shows that record-breaking new bond issuance is concentrated in the technology sector. Wall Street believes this round of record bond issuance is financing AI infrastructure, data centers, power, and other massive capital expenditures, with funds flowing into real-world investment through corporate bond issuance. Simultaneously, a large amount of new debt needs to be absorbed by fixed-income funds such as insurance companies, pension funds, and bond funds.
The problem is that bond supply is increasingly approaching the market's absorption limit. If investors demand higher yields, larger discounts on new bonds, or if the issuance pace suddenly becomes unbalanced, it could drive up credit spreads and long-term interest rates.
For the stock market, this would create triple pressure: high interest rates increase the discount rate for stock valuations, high-yield bonds divert funds originally allocated to stocks, and rising financing costs could force tech giants to cut AI capital expenditures. Therefore, whether the current bond market can successfully absorb the record supply is no longer just a problem of the credit market itself, but a crucial condition for sustaining AI investment and the high valuations of US stocks.
