alexsl A surge in high-quality debt issuance is expected to test investor demand and keep upward pressure on borrowing costs, according to Apollo’s chief economist Torsten Slok. In total, roughly $14T in investment-grade supply could come to market over the next year, driven by a combination of public and private sector financing needs. A significant portion stems from the U.S. government, which m...
alexsl A surge in high-quality debt issuance is expected to test investor demand and keep upward pressure on borrowing costs, according to Apollo’s chief economist Torsten Slok. In total, roughly $14T in investment-grade supply could come to market over the next year, driven by a combination of public and private sector financing needs. A significant portion stems from the U.S. government, which must refinance approximately $10T in existing debt over the next 12 months while also funding an estimated $2T budget deficit. At the same time, corporate borrowers are poised to add to the supply wave, with gross investment-grade issuance projected to reach around $2T in 2026. Increased borrowing from large technology firms, particularly hyperscalers, is expected to play a key role. Taken together, the influx of new debt is likely to create a more competitive environment for capital, putting upward pressure on Treasury yields and widening credit spreads as investors demand higher compensation to absorb the growing supply. “The bottom line is that the growing supply of investment grade fixed income product is putting upward pressure on rates and credit spreads,” Slok said. U.S. Treasury Yields: ( US2Y ), ( US5Y ), ( US10Y ), ( US20Y ), and ( US30Y ). Fixed Income ETFs: ( TLT ), ( TLH ), ( IEF ), ( IEI ), ( SHY ), ( SGOV ), ( SCHO ), ( BIL ), ( AGG ), ( BND ), ( VCIT ), ( MUB ), ( MBB ), ( JNK ), ( LQD ), ( HYG ), ( VTIP ), ( TIP ), ( SCHP ), ( STIP ), ( TIPX ), ( SPIP ), ( WIP ), ( GTIP ), ( LQDI ), and ( RINF ). More on markets Cantor Fitzgerald sees the current market pullback as a possible opportunity BNP Paribas raises 2026 inflation outlook as it signals a new 3% era Wells Fargo sees the U.S. economy weathering an oil shock as inflation risks stay contained Sector breakdown since the start of the U.S.–Iran conflict: Energy leads, materials lags The AI Bubble Is Going To Burst