AI Bond Deluge Pushes Some Investors to Seek Shelter in MBS

Money managers including Columbia Threadneedle are looking closely at US mortgage backed securities as a place to hide from high valuations in US corporate bonds and a wave of tech bond sales that could weigh on returns.

Overall US investment-grade issuance will probably top $800 billion in 2026, stripping out refinancings, a net increase of about 54% from this year, JPMorgan Chase & Co. strategists wrote last month. A chunk of those sales will come from tech companies investing in artificial intelligence infrastructure, such as data centers. Heavy issuance could push risk premiums slightly wider, with JPMorgan last week estimating about 0.15 percentage point of widening for high-grade US corporate debt in 2026.