Everyone talks about compute and energy as the limits of this AI (or SI, if you prefer) boom. I think the weak link of the chain is another one: the ability to attract capital. I don't believe money will disappear, but it will become much more expensive, and this changes the game for many.

Big Tech used to pay for its growth with its own cash flow. Today AI capex absorbs almost all of it, so they go to the bond market, and globally AI-linked debt is expected to reach around $570bn this year. In the meantime US yields keep going up, with the 10-year around 5.3% and the 30-year around 5.6%, levels we haven't seen since 2002. Deficits and the Fed are the main drivers, but the result is that governments, hyperscalers and every other company are now competing for the same money.

And nobody wants to commit for long. Investors prefer short maturities and ask a big premium for the long end, while companies don't want to lock in high rates today if they think they will come down tomorrow.

When the blanket is short, someone stays cold. Those who borrowed cheap in 2020-21 and now have to refinance at 5-7% are the most exposed, with about $3.6tn of US corporate debt maturing between 2026 and 2028. As the FT wrote today, many will struggle, especially if their profitability doesn't grow at the same pace as their cost of debt.

Here in Asia we feel it twice. When US yields rise, our assets have to compete harder for global capital, and the weaker currencies, especially those of oil importers, are the first to suffer. The markets linked to the tech cycle are holding better, at least for now.

- SL