The continuation of global bond sales is anticipated due to high government debts and significant financial deficits, particularly in relation to investments associated with artificial intelligence. A recent report from ICICI Bank Research indicates that this trend will persist until early 2027.
Increase in Bond Yields
The yield on 10-year U.S. bonds reached 5.3 percent in late September and early October, the highest level since 2002. Currently, yields in Germany, France, the United Kingdom, and Japan have also reached their highest levels in several decades. This significant increase is attributed to structural factors including financial deficits and high levels of debt.
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New Pressures from Artificial Intelligence
One new factor increasing pressure on bonds is the boom in investments in artificial intelligence infrastructure. Companies related to artificial intelligence are expected to raise about $500 billion through bonds by 2027, which will compete with U.S. government long-term financing. This phenomenon is known as "reverse draining," where private sector borrowing puts additional pressure on government bond yields.
Additionally, ICICI Bank reported that major U.S. technology companies borrowed about $220 billion through debt instruments in 2026, with their capital expenditures expected to reach $729 billion this year and $1.069 trillion by 2027.
Finally, monetary policies are also considered a significant pressure point. The U.S. Federal Reserve raised rates by 25 basis points in September, and several other central banks have tightened their policies this year. Markets expect further rate increases, which will add more pressure on bond yields.
However, if the resolution of conflicts in West Asia accelerates, oil prices decrease, and the pace of borrowing in the artificial intelligence sector slows, pressures may ease. According to the report, as revenues from previous investments begin, operational cash flows could cover a larger share of capital expenditures.
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