What the AI investment boom means for bonds | Market Week in Review

Description: In this Market Week in Review (MWIR), Russell Investments’ Co-Head of Global Fixed Income Riti Samanta examines what the AI investment boom means for bond markets, including its potential impact on real interest rates, U.S. Treasury yields and corporate credit.   Key takeaways: \- Treasury yields rise amid shifting views on policy, inflation and growth \- AI investment may lift real rates, but Treasury crowding-out evidence remains limited \- Strong fundamentals and demand support rising AI-related credit issuance   Questions answered: What does the AI investment boom mean for bond markets? AI investment is increasing financing needs across the economy and may contribute to higher real interest rates. It is also generating significant issuance across investment-grade, high-yield and securitized credit markets.   Is AI investment pushing U.S. Treasury yields higher? AI investment may be contributing to higher real rates through increased demand for labor, energy, equipment, construction and capital. However, there is currently limited evidence that AI-related corporate borrowing is directly crowding out demand for U.S. Treasuries.   Why haven’t credit spreads widened despite higher issuance? Much of the AI-related issuance has come from large, highly rated technology companies with strong profitability, interest coverage and balance sheets. Robust investor demand for investment-grade credit has also helped absorb the additional supply.   How is the AI buildout being financed beyond corporate bonds? Data centers and other AI infrastructure are increasingly tapping high-yield and securitized markets, including asset-backed securities and commercial mortgage-backed securities. These markets could play a growing role in financing the broader AI buildout.   Explore more Market Week in Review: Market Week In Review   Subscribe to Russell Investments for weekly market insights: https://www.linkedin.com/newsletters/market-week-in-review-7392305653110960128/ #MarketWeekInReview #ArtificialIntelligence #BondYields #FixedIncome #treasuries  Disclosures These views are subject to change at any time based upon market or other conditions and are current as of the date at the top of the page. Investing involves risk and principal loss is possible. Past performance does not guarantee future performance. Forecasting represents predictions of market prices and/or volume patterns utilizing varying analytical data. It is not representative of a projection of the stock market, or of any specific investment. This material is not an offer, solicitation or recommendation to purchase any security. Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional.  The information, analysis and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual entity. Please remember that all investments carry some level of risk. Although steps can be taken to help reduce risk it cannot be completely removed. They do no not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns. Investments that are allocated across multiple types of securities may be exposed to a variety of risks based on the asset classes, investment styles, market sectors, and size of companies preferred by the investment managers. Investors should consider how the combined risks impact their total investment portfolio and understand that different risks can lead to varying financial consequences, including loss of principal. Please see a prospectus for further details. Indexes are unmanaged and cannot be invested in directly. Copyright © Russell Investments Group LLC 2026. All rights reserved. This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments. It is delivered on an “as is” basis without warranty. CORP-13022 Date of First use: September, 2026