{
  "id": 4260881,
  "title": "Wall Street used to worry that too much U.S. debt would crowd out the private sector. But AI hyperscalers are ‘reverse crowding’ the Treasury",
  "url": "https://urgent.news/2026/08/29/wall-street-used-to-worry-that-too-much-u-s-debt-would-crowd-out-the",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-08-29T18:59:00.000Z",
  "source": {
    "name": "Fortune",
    "slug": "fortune",
    "url": "https://fortune.com/2026/08/29/us-debt-reverse-crowding-out-effect-ai-hyperscaler-bonds-treasury-yields/"
  },
  "original_language": "en",
  "account": "For years, Wall Street had feared that an excessive U.S. debt burden would restrict private sector investment opportunities. However, the rise of AI hyperscalers has led to a phenomenon where these tech giants are \"reverse crowding\" the Treasury Department. Currently, U.S. debt stands at a staggering $40 trillion, with a projected federal budget deficit of $2 trillion for this fiscal year. This has driven up the Treasury's debt servicing costs to $1 trillion annually, resulting in a significant demand for capital in the bond market. Nevertheless, AI companies have managed to secure ample debt to fund their efforts in chip manufacturing, data center construction, and infrastructure development. Treasury Secretary Scott Bessent has observed this growing interest, explaining that corporate issuances are driven by the high expected returns on AI ventures, and companies are largely indifferent to borrowing costs. U.S. investment-grade corporate bond issuance has surged to $1.7 trillion in the first quarter of 2023, surpassing last year's levels and projected to exceed $2 trillion for the year. Despite this massive influx of corporate debt, the yield spread remains relatively low, indicating a compressed premium compared to risk-free bonds like U.S. Treasuries. This compression has been driven by the high demand for AI-related bonds, causing Treasury yields to increase instead. This \"crowding-out\" effect may eventually lead to a feedback loop where rising debt-servicing costs spur further deficits, perpetuating the cycle of increasing U.S. debt. However, the rise in Treasury yields can be attributed to various factors, including persistent budget deficits, high oil prices due to the Iran war, and a robust U.S. economy fueling inflation. While international capital flows have shown a preference for corporate bonds over Treasury debt in recent years, the rise in AI-related financing has also caught the attention of the Federal Reserve Chairman, Kevin Warsh. He emphasized in his recent speech at the Jackson Hole conference that private credit is playing a crucial role in financing the AI boom. Yet, the market has shown signs of fatigue as the flood of debt continues to grow, with hyperscalers now paying higher premiums compared to risk-free bonds.",
  "summary": "\"Capital flowing into corporate bonds is capital not flowing into Treasuries, and Treasury yields have had to rise to clear the market.\"",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 7,
    "also_reported_by": [
      {
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        "url": "https://urgent.news/2026/08/26/five-things-to-know-about-anthropic-ahead-of-wall-street-debut",
        "published": "2026-08-26T02:14:00.000Z"
      },
      {
        "outlet": "Economic Times Tech",
        "title": "Five things to know about Anthropic ahead of Wall Street debut",
        "url": "https://urgent.news/2026/08/26/five-things-to-know-about-anthropic-ahead-of-wall-street-debut-3439386",
        "published": "2026-08-26T05:09:59.000Z"
      },
      {
        "outlet": "Business Insider",
        "title": "Stanley Druckenmiller's AI writing has split Wall Street down the middle",
        "url": "https://urgent.news/2026/08/26/stanley-druckenmillers-ai-writing-has-split-wall-street-down-the",
        "published": "2026-08-26T17:12:25.000Z"
      },
      {
        "outlet": "The Hill",
        "title": "Wall Street Journal: Billionaire did not violate policies by using AI for op-ed",
        "url": "https://urgent.news/2026/08/26/wall-street-journal-billionaire-did-not-violate-policies-by-using-ai",
        "published": "2026-08-26T18:10:57.000Z"
      },
      {
        "outlet": "The Sydney Morning Herald",
        "title": "ASX set to edge up, Wall Street gets AI boost; Virgin, Harvey Norman results ahead",
        "url": "https://urgent.news/2026/08/27/asx-set-to-edge-up-wall-street-gets-ai-boost-virgin-harvey-norman",
        "published": "2026-08-27T19:16:18.000Z"
      },
      {
        "outlet": "The Age",
        "title": "ASX set to edge up, Wall Street gets AI boost; Virgin, Harvey Norman results ahead",
        "url": "https://urgent.news/2026/08/27/asx-set-to-edge-up-wall-street-gets-ai-boost-virgin-harvey-norman-3805535",
        "published": "2026-08-27T19:16:18.000Z"
      }
    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}