Warsh ties part of the yield rise to hyperscalers' funding competition

Worked backward, the pace figures show where this year's extra supply comes from. A corporate year of more than $2.8 trillion that is 28% above 2025 implies roughly $2.19 trillion last year, or about $610 billion of added corporate bonds ^[4][1]. A Treasury year of more than $4.9 trillion that is about 2% higher implies roughly $4.8 trillion last year, or about $100 billion added ^[3][2]. Companies are supplying about six times as much of the increase as the government ^[3].

At the long end, the headline comparison overstates the overlap. Treasury's 20- and 30-year bonds have totalled about $344 billion this year, 12% of its medium- and long-term issuance ^[5]. Corporate bonds of 10 years or longer have reached $752 billion ^[6], about 2.2 times as much ^[4]. A 10-year corporate bond competes with the 10-year Treasury note, and that note sits in the government's $3.3 trillion total, not in the $344 billion ^[3][5]. The reported figures do not separate out corporate bonds of 20 years and longer, the bucket where hyperscaler 30-year deals would land.

The conventional worry runs the other way, with government borrowing pulling savings away from private investment ^[8]. Warsh put the reverse on the record after the Federal Open Market Committee meeting. "The surge in capital expenditures ... is real, and the so-called hyperscalers are out in the market raising funding, and so the competition for capital is real and I think it partly explains the increase in yields," he said ^[1].

The buyers in question are specific. "A lot of the hyperscalers are issuing long term debt, 30-year debt, which is in direct competition with Treasuries," said Skanda Amarnath, executive director of Employ America. "There's a finite number of investors who are willing to invest in really long-dated fixed income products. It's a deep market, but it's not infinite." ^[2] John Velis, Americas macro strategist at BNY, said competition for Treasury bonds has reached a level not seen since the dotcom boom of the 1990s ^[11]. "Long-term investors would prefer AAA or investment grade sexy bonds that are of the current investment theme, which is now AI," Velis said ^[10].

Inflation and expected rate hikes are the main reasons American Banker gives for yields at 20-year highs ^[13]. If they account for nearly all of the move, the hyperscaler effect is a small share inside Warsh's "partly". A sharp tech slowdown is the one exception American Banker names to its view that long rates could stay high while annual AI capital spending tops $1 trillion next year ^[14]. Absent either, the same long-dated buyers have to absorb both borrowers at once.

I think that last case is the likeliest over the next year. The added supply is mostly corporate, and the buyers Amarnath names are the ones who also hold the long bond. The counter-case is Velis's own caveat that supply-side shocks are also lifting yields ^[12]. The thesis is wrong if hyperscaler long bonds keep arriving while 30-year Treasury yields fall relative to shorter maturities.