Guojin Securities: AI Capital Expenditure Crowding Out Sovereign Debt May Force the Fed to Ease
Nashnova编辑部
The 30-year Treasury yield hit 5.32%, the highest since 2007. Guojin Securities argues AI giants have turned from cash-flow generators into long-term capital competitors against the U.S. government — a crowding-out effect that may ultimately force the Fed toward easing.
Why did long-end yields just spike to an 18-year high?
The 30-year Treasury yield briefly topped 5.32% on August 18 — the highest since 2007. The 10-year also broke through 4.7%.
Guojin Securities frames the move as "one primary contradiction, two secondary contradictions, and one grey rhino."
This means → the surge is not driven by a single factor but by multiple pressures squeezing the long end simultaneously.
How is AI capex crowding out the sovereign bond market?
The five hyperscale data-center operators are expected to spend $750–800 billion in capex in 2026, rising to $1.0–1.1 trillion in 2027.
PIMCO previously estimated that 2026–2027 capex would consume roughly 94% of these companies' operating cash flow; after recent plan upgrades the ratio may already be approaching 95%–100%. In plain terms = the tech giants are burning nearly all the cash they generate — the gap has to be filled by issuing debt.
Guojin estimates the five companies will issue about $250 billion in bonds in 2026 and possibly $400 billion in 2027. This means → they have shifted from cash-flow creators and stock buyback machines into long-term capital demanders, competing directly with the U.S. government for the same pool of long-duration money.
Is the market already voting with its feet?
The Dallas Fed estimated that if AI-related investment-grade corporate bond issuance reaches $300 billion this year, it could create roughly $360 billion in 10-year-equivalent duration supply — about one-eighth of total Treasury duration supply.
Subscription coverage ratios for new hyperscale debt have dropped from nearly 5× in February to under 2× in July. New-issue premiums widened from 2–3 basis points to roughly 12 basis points.
This reflects a clear decline in the market's marginal absorption capacity — buyers are not walking away, but they are demanding a higher price to show up.
What are the two secondary contradictions?
First: a Fed credibility discount. After the July FOMC meeting, market pricing shifted from "rate-hike expectations" to "Fed credibility discount" — the short end fell while the long end rose. In plain terms = the market is no longer betting on whether the Fed hikes; it is pricing whether the Fed's word still carries weight.
Second: high oil prices fueling long-run inflation fears. Brent crude rose for a third straight day on August 18 to a monthly high of $92/barrel. The concern is not an imminent rate hike but that elevated oil prices will make the inflation path stickier for years, prompting investors to demand higher inflation-risk compensation and term premium on long bonds.
Guojin argues the current extreme rate levels actually present an opportunity to test new Fed Chair Kevin Warsh's policy stance.
Can the Treasury's buyback expansion fix this?
On August 19, the U.S. Treasury announced it would at least double its 10-to-30-year nominal bond liquidity-support buyback program from September 9 through November 4, raising the per-operation cap from $2 billion to at least $4 billion — adding at least $14 billion in purchasing capacity.
After the announcement, the 10-year yield dropped roughly 7 basis points and the 30-year fell nearly 10 basis points.
This means → the short-term "peak-shaving" works, but Guojin believes it cannot fundamentally reverse the long-term upward pressure on rates driven by fiscal expansion — it treats the symptom, not the cause.
What is the "grey rhino," and what is the bottom line?
Japan faces a triple bind: halting yen depreciation, controlling domestic rate increases, and maintaining fiscal stability. As Japan's risk-free rate rises, the hedged yield advantage of Treasuries over JGBs may shrink further. Data show Japan's Treasury holdings fell roughly 2.3% month-on-month in June to $1.116 trillion.
The Congressional Budget Office has raised its FY2026 deficit forecast from $1.9 trillion to $2.1 trillion. Through the first ten months, the fiscal deficit has already reached roughly $1.798 trillion, exceeding the prior-year pace.
Guojin's conclusion: expanding AI financing demand, deteriorating global long-term capital supply-demand, and Japan's negative-feedback reallocation together force the Fed toward easing and support further gold appreciation. But the "Bessent put" and the upcoming Jackson Hole conference offer only a short-term repair window for long-end rates — don't overestimate its durability.
Content is for reference only, not financial advice.