PIMCO President Christian Stracke stated on October 2, 2026, that the rising demand for capital from hyperscalers and the AI ecosystem is driving up real rates and bond yields. He attributes this trend to competition for a finite pool of capital rather than inflation expectations.
Capital expenditure by hyperscalers is estimated at nearly $690 billion for 2026, with projections reaching $870 billion in 2027. Earlier this year, these estimates were at approximately $480 billion. Debt issuance by these companies in 2026 has already surpassed the 2025 total.
The 10-year Treasury yield has climbed toward 4.75%, reaching the upper limit of its multi-year range. Consensus estimates from late September 2026 suggest an additional $500 billion in AI-related credit supply over the next 12 months.
PIMCO executives expressed concern regarding potential market indigestion due to the rapid pace of AI-related debt issuance. Higher real yields may negatively impact lower-quality borrowers, while potentially supporting high-quality fixed-income investments in the long term.
