Last week I talked about the companies building AI data centers, sometimes called “neoclouds.” They’re borrowing heavily to do it, with about $400 billion in bond sales.

Why that matters for rates: Think of the bond market as one big pool of investor money. The U.S. government borrows about $2 trillion a year from that pool by selling Treasuries.

When AI companies show up wanting another $400 billion, it’s like a second big buyer bidding on the same house. More competition for the same money means borrowers have to offer higher interest rates to win it.

On top of that, China and Japan have been selling U.S. Treasuries. That’s like two longtime customers walking out of the store. Fewer buyers makes it harder for rates to hold on to their recent gains.

The bigger worry: The math on paying back this debt doesn’t add up yet. These companies may need over $8.5 trillion in revenue to cover it, but projections show only about $3.6 trillion. It’s like taking out a mortgage that assumes a $250,000 salary when you’re on track to earn $100,000. It works only if something big changes.

We see rates holding steady regardless of good or bad news. We may have found a ceiling at 7.5% national average. Don’t like it but its not going higher.

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