Week Ending: November 6, 2026
Conflicted Compute
Share Of U.S. Adults Using Digital Services Vs. Opposing Local AI Data Centers
Sources: Pew Research Center, Gallup, McKinsey
With depressed sentiment and elevated energy prices, a backlash against the party in power in the 2026 midterms was hardly surprising. After all, the President’s party has lost House seats in 20 of the 23 past midterms since 1934. What stood out was the scale of the result: Democrats won control of the House and Senate, plus several key governorships in traditionally Republican states. One issue unites Americans across party lines, though: opposition to data centers. In a recent Gallup survey, 71% of respondents opposed local construction of AI data centers. Could public discontent halt the AI buildout? We doubt it. For one thing, Americans rely on data centers far more than they realize, whether asking ChatGPT a question, scrolling through Instagram, watching YouTube, or searching the Internet. Although AI is a growing share of data center demand, conventional digital services still made up nearly half of capacity demand in 2025. For another, it’s reasonable for communities to want a say in where data centers go and clarity on what they’ll bring. Local opposition gives developers more incentive to seek out sites with available power and fewer neighbors. Midterms mark the nation's mood, but they won't derail the AI-led growth story.
Total Returns By Asset Class
Highlights of the Week:
High Yield: The high yield market has seen less than $10 billion of net new issuance in October, compared to September’s record net issuance of $36 billion. Issuers have largely stood down as the market digests volatility in rates and in AI-related issuers. It is a sign of market health that issuers have the financial wherewithal to wait for more favorable conditions before issuing. Balance sheets and maturity profiles are generally sound, which has helped keep spread volatility in check.
Corporates: Microsoft tapped the market this week for $25 billion across 10 tranches, ending a three-month drought in hyperscaler issuance. This was Microsoft's first bond issuance since 2017, with books topping out at $115 billion, the sixth largest on record.
Municipals: Municipals rebounded sharply in October, outperforming Treasuries. Municipal yields declined 57 bps, supported by approximately $11 billion in fund inflows, while issuance totaled $51 billion for the month. Despite elevated supply, strong investor demand helped drive the municipal market’s recovery.
Equities: U.S. equities experienced heightened volatility this week following the midterm elections, as a sharp pullback in AI-related stocks weighed on broader market performance. Market declines accelerated on Thursday, with the Nasdaq-100 recording its largest single-day loss since April 2025. At a sector level, energy, technology, and industrials underperformed, while consumer discretionary, communications, and real estate demonstrated relative resilience.
Securitized Products: Blackstone priced the largest single-asset, single-borrower (SASB) transaction of the year, a $3.34 billion refinancing backed by multifamily assets. The Blackstone deal will bring gross SASB issuance to $86 billion year-to-date, putting 2026 in close competition with 2025, a post-global financial crisis record year. AAA-rated commercial real estate (CRE) collateralized loan obligations (CLOs) tightened marginally this week after widening in October on interest rate concerns. CRE CLO new issuance has come to a halt, as deal pricing remains uncertain and the market has yet to find equilibrium.
Disclosure: This material reflects the firm’s current opinion and is subject to change without notice. Sources for the material contained herein are deemed reliable but cannot be guaranteed.
