Aug 25, 2026 · 25 min

Treasury yields test markets as tariffs and AI spending collide

Bloomberg Surveillance TV: August 25th, 2026

Higher borrowing costs could pressure fiscal policy, trade relationships, and the debt-financed infrastructure behind the global AI buildout.

3 key takeaways

1Fiscal pressure and elevated real capital costs are keeping long-term Treasury yields and the Fed’s response under scrutiny.
2U.S.-Canada tariff threats put automotive integration and the durability of USMCA at risk.
3NVIDIA’s strong demand outlook meets a harder financing environment for the global data-center expansion.

Don't miss

Ted Mortonson links the AI infrastructure boom’s durability to a potentially consequential rise in the 10-year Treasury yield.

The brief

George Goncalves argues that fiscal pressure and an elevated real cost of capital are central to the bond market’s question: are long-term Treasury yields properly priced?

The discussion separates Treasury intervention from quantitative easing while weighing dollar-debasement fears, Bitcoin and gold strength, and the Federal Reserve’s response to tighter financial conditions.

Proposed U.S. tariff increases on Canadian automobiles raise the risk of retaliation and a broader trade war, even as both countries remain bound by deeply integrated supply chains.

Ted Mortonson sees strong NVIDIA demand, pricing power, and constrained supply supporting AI hardware, but warns that higher yields could strain debt-financed infrastructure spending.

The global data-center buildout faces political, regulatory, and financing constraints, while sharp technology volatility keeps hedge-fund and mutual-fund managers closely engaged.

What was said on this episode

24 statements · 11 positive · 8 negative · 5 neutral

George Goncalveson U.S. deficitsNegative3:02
“our deficits are not getting any better”
Listen at 3:02
George Goncalveson U.S. federal government spendingNegative3:09
The U.S. government is spending excessively
“We're spending too much.”
Listen at 3:09
George Goncalveson Real cost of capitalNegative3:35
AI spending and fiscal pressures are raising real capital costs
“We're commanding a higher real cost of capital”
Listen at 3:35
George Goncalveson AI SpendingNegative3:41
Higher real capital costs are partly caused by AI spending
“It's a function of the AI spending.”
Listen at 3:41
George Goncalveson AI investment and sovereign borrowingNeutral3:48
Private-sector AI investment now competes with sovereign borrowing for capital
“We have competition for capital, which we have not had for 20, 30 years.”
Listen at 3:48
George Goncalveson Fed discussion of long-term ratesNeutral5:10
Fed discussion of stable long-term rates could move markets
“any conversation around that on Friday could be market moving”
Listen at 5:10
George Goncalveson Treasury interventionNeutral5:46
Treasury intervention is not quantitative easing
“from the Treasury perspective, is not QE.”
Listen at 5:46
George Goncalveson Fed task-force informationPositive7:11
More Fed task-force information could stabilize markets
“Give the market some meat, and I think you can kind of stabilize things.”
Listen at 7:11
Ted Mortonsonon CanadaNeutral9:48
Canada should retaliate if Trump escalates tariffs
“Canada needs to be ready to do the same.”
Listen at 9:48
Ted Mortonsonon Canadian retaliationNegative10:02
Canadian retaliation should impose economic pain on the United States
“making sure that America's economy feels the pain.”
Listen at 10:02
Ted Mortonsonon Canadian retaliatory tariffsNegative11:44
Canadian retaliatory tariffs will affect $20 billion of U.S. trade
“we can expect Canadian tariffs to hit 20 billion of U.S. trade.”
Listen at 11:44
Ted Mortonsonon USMCA content requirementsPositive13:36
USMCA should tighten North American content requirements
“a USMCA agreement really does need to include these content requirements”
Listen at 13:36
Ted Mortonsonon Nvidia CorporationPositive17:04
NVIDIA has pricing power and demand exceeding its capacity
“they've got pricing leverage and they've got more demand than they can fulfill.”
Listen at 17:04
Ted Mortonsonon NVIDIA earnings reportPositive17:08
NVIDIA’s upcoming report will show strong demand and pricing power
“I think you're going to see that in the NVIDIA report.”
Listen at 17:08
Ted Mortonsonon Nvidia CorporationPositive17:15
NVIDIA will exceed consensus expectations with robust earnings
“I think they're going to surprise the street on some very robust earnings and commentary.”
Listen at 17:15
Ted Mortonsonon AI hardwarePositive17:24
Investors should increase exposure to hardware
“I think so.”
Listen at 17:24
Ted Mortonsonon AI infrastructure spendingPositive18:39
AI infrastructure spending will reach $1.1 trillion next year, up 40%
“you're looking at 1.1. you know, trillion dollars of spend next year. That's up 40%.”
Listen at 18:39
Ted Mortonsonon 10-year Treasury yieldNegative19:37
The 10-year Treasury yield may exceed 5%
“I would not be surprised if the 10-year goes through 5%”
Listen at 19:37
Ted Mortonsonon Technology sector fundamentalsPositive20:13
Technology fundamentals are robust
“they are robust.”
Listen at 20:13
Ted Mortonsonon Semiconductor stocksPositive20:16
Semiconductor stocks may rebound
“I would not be surprised if you see a snapback in the socks.”
Listen at 20:16
Ted Mortonsonon Data-center constructionNeutral21:27
The data-center construction cycle is global, not U.S.-only
“This is a global build.”
Listen at 21:27
Ted Mortonsonon Middle Eastern sovereign investorsPositive21:42
Middle Eastern sovereign investors will build aggressively in AI
“They're going to build, and they're going to build hard in AI.”
Listen at 21:42
Ted Mortonsonon China’s access to powerPositive22:02
China is far ahead of the United States in access to power
“China's way ahead of the U.S.”
Listen at 22:02
Ted Mortonsonon Technology-sector volatilityNegative22:35
Extreme technology volatility is preventing portfolio managers from taking time off
“the volatility in certain segments in tech has been so dramatic that they cannot take a time off.”
Listen at 22:35

Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.

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