# Rates may have peaked. AI's credit boom is just getting started.

Page: https://stenobird.com/podcast/the-weekly-fix-6462690/rates-may-have-peaked-ai-s-credit-boom-is-just-getting-started
Text version: https://stenobird.com/podcast/the-weekly-fix-6462690/rates-may-have-peaked-ai-s-credit-boom-is-just-getting-started.md
Podcast: [The Weekly Fix](https://stenobird.com/podcast/the-weekly-fix-6462690)
Published: 2026-07-07T12:00:00+00:00
Episode link: https://the-weekly-fix.captivate.fm
Audio file: https://episodes.captivate.fm/episode/936f8ea5-4a81-4a6d-a21a-26f11a5f5d43.mp3
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Duration seconds: 241

## Resource

Fed hikes may be overpriced, but yields stay supported by AI-driven growth. IG carry remains strong as record supply tests spreads. The Treasury curve is expected to steepen in the second half of 2026: front-end yields may ease as oil-driven inflation pressure subsides and markets have potentially priced in too many Fed hikes under Chair Warsh's data-dependent regime, while robust AI-related investment and productivity-driven growth should keep yields stable to slightly higher at the 10-year and beyond. Investment grade credit spreads remain tight — index OAS at 74 basis points with a yield-to-worst of 5.22% — yet strong company fundamentals and yield-based demand have absorbed the heaviest supply environment in years, with US IG gross issuance already crossing $1.26 trillion year-to-date, matching the record pace set in 2020, and July alone forecasted to bring approximately $130 billion in new supply — the busiest July in a decade. Technology and data center bonds have become the defining theme in IG credit for 2026: hyperscalers are expected to borrow as much as $190 billion in the bond market this year alone, and while the team sees this pace continuing, they are building exposure selectively — targeting wider spread entry points among the highest-quality issuers while remaining overweight banks, defensive sectors, corporate hybrids, and insurance, and largely avoiding deep cyclicals and BDC bonds.

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## Transcript

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