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September 12, 2026
Partner, Chief Economist
Too much saving pushed rates down for two decades. The problem was that there was more capital than projects to invest in.
That has now changed. Today, there are more projects than capital.
Think about what that does to price. When capital is abundant and projects are scarce, projects compete for capital, and they compete by accepting a lower return. When projects are abundant and capital is scarce, capital competes for projects, and it competes by demanding a higher return. The return that clears the market is a higher yield.
Take the data center buildout as an example. It is not that the money isn't there. Hyperscalers have raised everything they have asked for. It is that they are paying more for it. Spreads on their longest-dated bonds have widened, and most of the paper issued in 2026 trades wider today than where it priced. Investors are still buying. They are just charging more.
Note where the repricing lands. Data centers, power generation, transmission and government deficits are all long-duration claims on savings. So the competition for capital concentrates at the long end of the curve, which is why long rates have moved more than short rates.
The bottom line is that we have been through a regime change. From a savings glut to a savings shortage, see chart below.
With this backdrop, it is not surprising interest rates are going up.
Note: For illustration purposes only. Source: Apollo Chief Economist
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