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The AI Buildout Is Being Financed On Your Yield Curve

The AI buildout is being financed in the bond market, and the bill lands on the duration you own.

September 06, 2026

The long end is stuck in the high 4s while gold sits above $4,500 and the dollar keeps slipping. The reason is supply. Hyperscalers are borrowing at a pace we have never seen to feed the AI machine, and Treasury is refunding into the same book of buyers. That changes how you position from here, whatever happens at the next policy meeting.

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Capital Spending Is Setting the Discount Rate

Here's the setup. Disinflation is real at the front of the curve: three-month core PCE has come down hard from where it sat in February. Short-dated Treasuries reacted for about a minute. Then the 10-year climbed right back to the high 4s and stayed there.

That's the tell. Front-end policy news is no longer clearing the long end, because the long end is being set by how much paper has to be sold. When issuance runs the curve, every long-duration asset you own gets repriced. Growth stocks, REITs, private credit. The whole complex.

Where This Actually Comes From

Three streams are feeding the long-end selloff. None of them are going away.

First, AI capex. Just five hyperscalers have printed roughly $220 billion in bonds this year to fund the buildout, and the pipeline of data center, power, and network spending behind it keeps growing. That's real crowding out on your yield curve. Second, fiscal. Treasury has a $40 trillion pile to fund, and the deficit isn't shrinking anytime soon. Third, the buyer base. Foreign official demand for long Treasuries has thinned, which is exactly why gold keeps setting the pace against every major currency.

Stack them up. You get sticky inflation expectations even if growth softens.

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Why This Isn't Ending Soon

The AI issuance treadmill isn't stopping. Global tech capex is running near $4.9 trillion, and every quarter brings you another wave of investment-grade paper. Supply pressure on the long end just keeps building.

Treasury refundings keep getting bigger too. With deficits stuck near 6% of GDP, every auction dumps more paper into an already jittery market, and that supply is what keeps repricing the bonds you hold.

Corporate credit is the pressure valve to watch. Investment-grade spreads have absorbed the tech issuance wave without widening much, and that calm is doing a lot of work in equity valuations. If a single mega-deal prices badly, the repricing shows up in your growth book before it shows up in the bond you never bought.

And policy? It moves the front end. Even a cut this month most likely steepens the curve rather than pulling the 10-year down with it, which is the opposite of the reflex trade most books are still built around.

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What This Sets Up Next

Expect vol to climb from the current 14 handle on the VIX. My base case is a market that grinds sideways with sharp rotations underneath. Not the clean uptrend your book was built for.

Growth-heavy names get punished on every leg higher in yields. Value, real assets, and cash-generative businesses catch the bid. The dollar likely weakens as fiscal-dominance concerns take hold, which keeps a bid under gold and copper even after silver gave back ground this year. If your commodity sleeve is still empty, that is the gap you close first.

If your book is overweight long-duration tech and light on commodities and midstream cash flow, you're on the wrong side of this regime. Period.

How to Position From Here

Own real cash flow, not promises. Midstream, pipelines, and integrated energy throw off yield backed by physical assets that hold up when the long end sells off.

Add exposure to power for AI. Data center demand is turning sleepy utilities into growth stories, and nuclear-heavy operators are the cleanest way to play it.

Own precious metals as a hedge. Gold near $4,500 and silver in the high $60s are telling you central bank reserve managers are already voting against long-duration paper.

Trim the most rate-sensitive growth. High-multiple software with no near-term profits gets hit hardest when the 10-year won't cooperate.

Keep dry powder. If yields spike to 5%, that's your buying window in quality names.

Top Picks

Shell plc (NYSE: SHEL)

Shell is one of the cleanest ways to own the energy complex without the political sideshow around US shale. At current crude levels, the company throws off enormous free cash flow, funds a solid dividend, and has been aggressive on buybacks.

The shares sit near the upper end of their 52-week range, so this is not a bargain hunt, but the cash return policy does not need higher crude to keep working.

The risk: A sudden Iran de-escalation or a Russia-Ukraine peace deal could take $10 to $15 off oil quickly.

Energy Transfer (NYSE: ET)

ET is a midstream operator with a trailing yield north of 6% and fee-based cash flows that don't depend on energy prices staying elevated.

What should catch your eye is the tie-in between US natgas infrastructure and AI data center power demand. Every hyperscaler siting new capacity in Texas or the Permian eventually becomes an ET customer. Distribution is well covered and management keeps raising it.

The risk: MLP tax treatment changes under a new Congress could compress the multiple.

Talen Energy (NASDAQ: TLN)

Talen owns nuclear generation directly connected to hyperscaler data centers, which puts it right at the center of the AI-power thesis.

The stock has rerated, but you've got more room as PJM capacity prices grind higher and new co-location deals get announced.

In a regime where the long end punishes speculative growth, owning the picks-and-shovels of AI power beats buying another chip name at 40 times earnings. Every time.

The risk: FERC rule changes on behind-the-meter data center deals could delay near-term deployments.

Ameriprise Financial (NYSE: AMP)

AMP is a wealth platform and asset manager sitting on a steepening yield curve, which is the friendliest environment for spread income in years. Advisor recruiting is running hot, net flows are positive, and the buyback is aggressive.

If the long end stays bid while the front end drifts lower on Fed cuts, AMP's net interest and float income both expand.

You're paying below peer-group multiples for a business with real operating leverage into this regime.

The risk: A sharp equity drawdown would hit AUM-based fees hard and cool the story fast.

The Read

Big Picture: Bond supply from the AI buildout and the deficit is setting long rates now, not the policy path.

What It Means: Sticky yields plus sticky inflation punish long-duration promises and reward real cash flow.

How To Play It: Overweight energy, midstream, and nuclear power. Trim the speculative growth. Keep dry powder for a 5% 10-year spike. That's when you back up the truck on quality.

Setup Scorecard

Entry Zone: Build energy, midstream, and nuclear power exposure at current levels. Scale in aggressively if the 10-year pushes toward 5%.

Target: 15% to 25% upside over 6 to 12 months on the real-assets basket. SHEL toward $105, ET into the mid-$20s, TLN with room above the current re-rate.

Stop Loss: A sustained 10-year break below 4.2% alongside a visible slowdown in tech and Treasury issuance would kill the supply thesis. Reassess the whole book.

Catalyst Timeline: PPI on September 10, CPI on September 11, FOMC decision on September 16, next Treasury refunding announcement in early November.

Confidence Level: High on direction (long real assets, short duration). Medium on timing, given how much lands this month.

That’s it for today’s edition—thanks for reading! Reply to this email with any feedback or let me know which macro trends or markets you’d like me to cover next.

Best Regards,
—Noah Zelvis
Macro Notes