Long-term interest rates remained close to 25-year highs during the week, while primary debt markets continued to run well. High absolute yields are supporting strong bond demand even as issuers face a potentially higher long-term cost of capital.
AI financing remains central to the supply story. Alphabet raised AUD 5.5 billion in the Australian-dollar bond market, Broadcom is reportedly looking at a $60 billion to $100 billion private-credit financing, SoftBank plans JPY 1 trillion of retail bonds, and QTS raised $3.9 billion.
Key market data
| Data point | Level | Weekly context |
|---|---|---|
| Brent crude | $92 | Little changed on the week. |
| UST 10-year | 4.7% | Around 25-year highs. |
| UST 30-year | 5.2% | Around 25-year highs. |
| ICE BofA Corporate OAS | 81bps | Around 25-year lows. |
| ICE BofA US HY OAS | 270bps | Around 25-year lows. |
Top talking points
Long-term rates remain elevated
The 10-year and 30-year US Treasury yields remain around their highest levels in 25 years. The US Treasury announced an increase in buybacks of 10-year and 30-year bonds, which may affect the pace of speculative positioning but is unlikely by itself to drive materially lower long-term rates if the move reflects broader fundamentals.
AI issuers are widening the funding pool
Alphabet’s AUD 5.5 billion transaction was the largest Australian-dollar corporate bond to date. Broadcom’s reported private-credit financing, SoftBank’s planned retail bonds, QTS’s $3.9 billion deal and Nebius’s $5.75 billion convertible bond show AI-linked borrowers using multiple markets to secure capital.
Inflation risk remains in the distribution
The Fed is balancing softer employment and consumer-spending indicators against oil at $92 and the possibility that AI capital expenditure creates more competition for resources. That mix makes the policy path more difficult and increases the risk of a policy error.
Demand for credit remains strong
Investment-grade spreads at 81bps and high-yield spreads at 270bps are both around 25-year lows, while high absolute yields continue to attract inflows into bonds.
Primary markets
- Bonds: Alphabet’s AUD 5.5 billion Kangaroo deal led a busy week across investment grade, high yield, SSA and emerging markets. Read the bonds roundup.
- Private Credit: Broadcom is reportedly considering a $60 billion to $100 billion AI-related financing, while specialist funds continued to raise capital. Read the private-credit roundup.
- Syndicated Loans: acquisition finance was particularly active, including facilities linked to Martin Marietta Materials, Madison Air Solutions and Francisco Partners transactions. Read the syndicated-loans roundup.
- Structured Credit: AGCO priced a $630 million agricultural-equipment ABS and CLO managers including Macquarie, Fortress and Bridgepoint transacted amid very tight spreads. Read the structured-credit roundup.
- Rates analysis: the interaction between long-term yields, AI capital demand, oil and inflation risk is becoming increasingly important for debt markets. Read the market analysis.
What to watch
- NVIDIA Q2 earnings: strong results could support another wave of AI-related issuance after Labor Day on 7 September.
- Fed Chair Kevin Warsh at Jackson Hole on 28 August: market consensus on the Fed path is fragile, increasing the importance of any clear steer on policy.
- Oil prices: escalation around the Strait of Hormuz could have significant short-term effects on rates.
“There’s a competition for capital happening from government financing”Alberto Musalem, President of the Federal Reserve Bank of St. Louis
Related coverage
DCM Insider also has a source-supplied short read on private-credit LPs looking for lower-competition markets to deploy capital.
