The US midterm election results may alleviate two major long-term pressures on the bond market: high energy prices and financing demand driven by AI data center construction. Global data center capacity is still expected to maintain a compound annual growth rate of approximately 17% until 2030, but the pace of construction may slow and the investment cycle may lengthen, thus spreading financing demand over more years and reducing the pressure on the credit market to absorb a large supply of bonds. Meanwhile, voter dissatisfaction with the US-Iran conflict and energy inflation may reduce market expectations of a renewed escalation of the conflict. Brent crude oil fell by nearly 17% this week, which is expected to alleviate inflationary pressures in Europe and benefit emerging markets. Voters' concerns about inflation may strengthen expectations of a eventual phased withdrawal of tariffs. Overall, the midterm elections do not necessarily signify a shift in the AI investment cycle, but are more likely to help the market gradually digest uncertainties related to policy, energy, and financing.
