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Hyperscaler bond boom is squeezing demand for Treasuries, El-Erian warns
Vanguard data cited by Yahoo Finance shows five hyperscalers have issued $132 billion in bonds so far this year, versus about $35 billion per year from 2020 to 2024.
Prominent economist Mohamed El-Erian said an influx of bonds from hyperscalers and national governments is competing with U.S. Treasuries and contributing to higher bond yields, arguing it reflects a supply and demand imbalance rather than inflation or Federal Reserve credibility.
El-Erian told CNBC that issuance from governments, hyperscalers, and companies is outpacing the pool of reliable buyers and holders of U.S. Treasuries, putting pressure on interest rates.
He linked demand pressures to shifting geopolitical preferences, saying China is less willing to buy Treasuries for geopolitical reasons, while Japan and Gulf countries face domestic constraints, and noted investors are also focused on uncertainty around the fallout of the U.S.-led war against Iran.
The story also cites Vanguard, saying five hyperscalers, Alphabet, Amazon, Meta, Microsoft, and Oracle, issued $132 billion in bonds so far this year to support the rapid pace of the AI buildout, compared with about $35 billion of debt annually from 2020 to 2024.