Lates News

Pimco said that, taking together nominal yields, term premiums and swap spreads, there is fairly scant evidence that AI companies' larger-than-expected debt issuance is pushing up U.S. Treasury yields. Multi-asset credit strategist Lotfi Karoui wrote in a report that the AI capital expenditure boom may indeed raise the equilibrium real interest rate through the savings and investment channel, but the narrower view that AI debt issuance is having a direct crowding-out effect on U.S. Treasuries is hard to find support for in the data. Pimco noted that there were six larger-than-expected debt issuance deals over the past year whose existing bonds fell abnormally around the announcement of the issuance, suggesting that the size or timing of these offerings was not fully priced in by the market.