How Trillions in New AI Debt Will Test the Bond Market | WSJ’s Take On the Week
In this week's episode of WSJ’s Take On the Week, co-hosts Gunjan Banerji and Telis Demos discuss the lingering economic impact of the U.S. government shutdown and why a lack of crucial inflation and jobs data is making the outlook murky for the Federal Reserve. Next, Nvidia is set to report its third-quarter earnings this week. And Morgan Stanley estimates that only half of the roughly $3 trillion in global data center spending through 2028 could be funded by projected cash flows. So how are tech companies going to fund the rest? Then after the break, Telis is joined by Guy LeBas, chief fixed income strategist at wealth management and investment banking firm Janney Montgomery Scott, to explore how the AI revolution will be financed. Oracle, Meta and Google parent Alphabet have made bond offerings valued in the tens of billions. LeBas explains that the trillions needed to help fund data centers will force tech hyperscalers to issue massive new debt, potentially increasing the size of the corporate bond market by 20% a year. And he talks about whether the AI bubble could find its way into the bond market. Chapters: 00:00 Welcome: Shutdown, AI bonds, and 2026 questions 01:06 The shutdown's "murky" economic aftermath 02:25 How rising stocks are boosting economic sentiment 03:22 Lack of data leaves the Federal Reserve uncertain 04:32 Has the AI stock trade hit a ceiling? 06:23 The trillion-dollar question: How to finance the AI build-out? 07:30 Why AI is becoming a huge bond market story 09:00 Guy LeBas on AI and the data center boom 10:05 The massive financing need for AI infrastructure 11:07 How an accounting change shifted AI financing 12:23 How AI could grow the corporate bond market by 20% 13:45 What rising AI bond supply means for investors 15:50 Evaluating the credit risk of AI bonds 18:24 Will the bond market become another big tech market? 20:45 How Fed rate cuts impact the bond market 22:30 Can the bond market be in a bubble? 24:20 The biggest risk: Is AI societally productive? This is WSJ’s Take On the Week where co-hosts Gunjan Banerji, lead writer for Live Markets, and Telis Demos, Heard on the Street’s banking and money columnist, cut through the noise and dive into markets, the economy and finance—the big trades, key players and business news ahead. As we look ahead to 2026, what major economic, markets or finance question is top of mind for you? We’d love to hear from you. Email the show at [email protected]. #WSJ #AI #BondMarket
