AI Spending Boom Drives US Investment-Grade Bond Sales to Annual Record of $1.76 Trillion

US investment-grade bond sales hit an annual record of $1.76 trillion on Monday, surpassing the $1.75 trillion issued during the pandemic-fueled borrowing boom of 2020. The milestone was driven largely by a surge in corporate borrowing tied to soaring artificial intelligence infrastructure spending, a trend that analysts had anticipated would push issuance to record levels throughout the year.

The record arrives as the broader bond market grapples with a stalled rally. A sharp October rally had pulled the 10-year Treasury yield below 5%, the lowest level in nearly a month, as investors sought safe havens amid a steep stock selloff driven partly by AI spending concerns and elevated oil prices. That rally has since lost momentum, leaving traders uncertain about the direction of yields from here.

Adding to the uncertainty is the approaching US midterm election on November 3. A Bloomberg Markets Pulse survey found that a Democratic sweep of both chambers of Congress is the outcome most likely to sustain a bond rally. Separately, France's sovereign debt situation is keeping European bond markets on edge, with Moody's having offered some near-term relief but markets remaining skeptical of the country's fiscal trajectory.