Al-‘Aryan: Tech Firms Compete with US Treasury for Bonds
The article discusses the state of the U.S. bond market, which is experiencing an increase in bond issuance by governments and major tech companies, primarily to finance their accelerating spending on artificial intelligence. Economic expert Mohamed El-Erian indicates that this massive surge in issuances—amounting to $132 billion since the beginning of the year from companies like Alphabet, Amazon, Microsoft, and others—exceeds the capacity of traditional buyers such as central banks and sovereign funds. This results in upward pressure on bond yields and their rise. This withdrawal of demand from traditional buyers is attributed to the likely decline in appetite from Japan, China, and Gulf countries to purchase U.S. bonds. The direct consequence of this is a rise in borrowing costs for households, as increased yields lead to higher mortgage and auto loan rates, reflecting negative impacts on the overall U.S. economy.
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