Durable goods data shows that there is a capex boom underway in the US economy, see chart below, and the One Big Beautiful Bill is going to boost business fixed investment further over the coming quarters.
The Industrial Renaissance Is Here
2026 Credit Outlook: From Scarcity to Selection—The Return of a Buyer’s Market
As we enter 2026, credit markets are undergoing a meaningful regime shift. While economic growth in the US remains sufficient to support most corporate and consumer fundamentals, the balance of power in credit is changing. After years defined by scarcity, markets are moving into a higher-supply environment, driven primarily by AI-related investment and a revival in M&A, setting the stage for greater dispersion, rising selectivity, and improved opportunities for buyers of credit.
Key themes shaping the credit landscape in 2026:
- AI is now the dominant source of incremental credit supply.
What began as a self-funded capex cycle has evolved into a broad-based financing event. Hyperscaler investment has already tripled since 2023, with cumulative AI-related spending expected to exceed $2.7 trillion from 2025 to 2029. As internal cash flows fall short, debt financing across IG, private credit, project finance, CRE, and ABS will increasingly shape issuance patterns and market correlations. - AI issuance is increasing concentration and correlation risk.
AI-related exposure is becoming pervasive across portfolios. Apparent diversification across issuers and sectors increasingly reflects a single macro bet on AI, elevating correlation risk. This dynamic heightens the value of diversification into areas structurally insulated from the AI arms race, including European private credit and sports financing. - M&A is returning at scale, reinforcing supply dynamics.
Lower financing costs, workable valuations, abundant private equity dry powder, and a more supportive policy backdrop are driving a resurgence in deal activity. Larger transactions are tapping multiple segments of the credit markets simultaneously, further expanding supply across both IG and leveraged finance. - The cycle is defined by dispersion, not distress.
Economic growth is narrowing rather than weakening, concentrating among higher-income consumers and large, AI-exposed corporates. This K-shaped environment is driving widening dispersion across credit markets, not forced selling or systemic stress. In this cycle, selectivity is paramount, and dispersion is the mechanism through which attractive opportunities emerge.
The information herein is provided for educational purposes only and should not be construed as financial or investment advice, nor should any information in this document be relied on when making an investment decision. Opinions and views expressed reflect the current opinions and views of the authors and Apollo Analysts as of the date hereof and are subject to change. Please see the end of this document for important disclosure information.
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The Standard & Poor’s 500 (“S&P 500”) Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies by market value.
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Extreme AI Concentration in the S&P 500
We have updated our chart book documenting the extreme AI concentration within the S&P 500’s market cap, returns, earnings and capex. It is available here.
The bottom line is that investors in the S&P 500 remain overexposed to AI.
The Impact of AI Remains Unclear
The latest Duke CFO survey shows that the vast majority of CFOs are seeing no impact from AI on labor productivity, decision-making speed, customer satisfaction or time spent on high value-added tasks, see chart below.
The US Is the Most Dynamic Economy in the World
Data from the Census shows that the weekly number of business applications is at all-time highs, see chart below.
Growing IG Issuance Will Put Upward Pressure on Rates and Credit Spreads
Hyperscalers and AI‑adjacent issuers are expected to contribute a meaningful share of incremental IG supply in 2026 as they fund large data‑center and AI infrastructure capex.
Estimates of 2026 IG gross issuance from 10 Wall Street banks show wide dispersion, with forecasts ranging from about $1.6 trillion at the low end to $2.25 trillion at the high end, see chart below.
The significant increase in hyperscaler issuance raises questions about who will be the marginal buyer of IG paper.
Will it come from Treasury purchases and hence put upward pressure on the level of rates? Or might it come from mortgage purchases, putting upward pressure on mortgage spreads?
The bottom line is that the volume of fixed-income products coming to market this year is significant and is likely to put upward pressure on rates and credit spreads as we go through 2026.
Future Early Retirement Age Across Countries
OECD data shows that the future early retirement age differs dramatically across countries. Illustrated using male workers, it is 58 in the UK, 62 in the US and 71 in Denmark, see chart below.
US Housing Outlook
Demand for housing is slowing because of high home prices, high mortgage rates and declining immigration.
Housing supply is steady because existing homeowners are reluctant to sell their homes, since they’re locked into lower mortgage rates and don’t want to take on higher ones. Housing supply of new homes is rising.
The bottom line is that falling demand and rising supply are putting downward pressure on home prices.
Our latest US housing outlook is available here.
G3 Fiscal Policy Very Expansionary in 2026
The IMF estimates that fiscal policy will boost growth by 1% in Germany and 0.5% in Japan in 2026. The CBO estimates that the One Big Beautiful Bill will boost US growth by 0.9%. The bottom line is that fiscal policy in the G3 will be very expansionary over the coming quarters, see chart below.
