BlackRock stated that the government's massive borrowing has already intensified capital competition, and the new financing demands from AI infrastructure mean that the upward pressure on yields is not yet over.

The investment research institute estimates that by 2030, the annual financing needs in the U.S. could approach $8 trillion, primarily driven by capital expenditures related to AI expansion. Another estimate puts it at over $7.5 trillion. Bonds related to AI and data centers account for about 14% of this year's U.S. investment-grade issuance, projected to be 5% by 2025, compared to about 1% over the past decade.

Strategy head Vivek Paul noted that even if the market discusses a slowdown in the development of cutting-edge models, it does not mean that physical expansion will decelerate, as most computing power is used for inference rather than training. Institutions maintain a risk appetite, avoiding the weakest borrowers and large-scale issuers in credit, favoring intermediate coupons. Concurrently, the situation in the Middle East and Brent crude oil returning above $100 per barrel are considered additional upward factors, with persistent inflation also factored in.

Major cloud providers issued about $200 billion in investment-grade bonds in the first half of the year, nearly double the total for 2025. The market previously attributed the rise in 30-year U.S. Treasury yields to the supply of tech bonds and growth expectations. Other analyses emphasize that deficits are the main cause, with the corporate sector still being net savers.

BlackRock's power research indicates that to meet data center demands, the U.S. may need to add about 148 gigawatts of power by 2030, compared to about 42 gigawatts of data center electricity use in 2025. Supply is manageable from 2026 to 2027, but tighter after 2027.

This is a game of existing stock. Buyers are issuers that must roll over government bonds and finance data centers, while sellers are the same long-duration funds. Funds are being squeezed between government bonds and investment-grade tech debt; the beneficiaries are credits that can provide intermediate coupons and are not super large issuers, while those under pressure are long-end Treasury holders and large-scale cloud providers expanding their balance sheets. Whether yields continue to rise depends on whether expansion truly halts with the slowdown in model development.

Source: Public Information