Close to $2.3 trillion of investment-grade corporate bonds are being issued this year, most of it tied to the hyperscalers, and Brij Khurana says that supply is the main reason yields are rising in every market at once.
Most of the argument about the Federal Reserve this year has been over how fast it cuts. Khurana thinks it has to raise rates this month, and that the chairman may not want to.
"At this point, I almost think they have to, because if they don't, then they could lose control of the long end of the yield curve."
Khurana runs fixed income money at Wellington Management, so the call he is making on the Fed is one he has to position a portfolio for.
I listened to the full segment so you can skip it.
Here are the 4 takeaways that matter.
👤 Guest: Brij Khurana, a fixed income portfolio manager at Wellington Management
📰 Published: 1 September 2026 on CNBC (Closing Bell Overtime)
🟣 Apple Podcasts | 🔗 Episode page | ⏱️ 3 min
Key Takeaways
The supply of new corporate debt, not the Federal Reserve, is what is pushing yields up worldwide Close to $2.3 trillion of investment-grade issuance this year, most of it tied to the hyperscalers The same pressure shows up in Treasuries, mortgages and corporate bonds alike
He reads the coming increases as insurance, which historically means about 75 basis points The market has roughly 60 basis points of increases priced over the next year
A September increase is close to forced, because the alternative is losing control of longer-dated yields About a 70% chance of a quarter-point move is already priced for this month
The 30-year yield gets the attention and has been the stable one He puts the range at 5% to 5.25%, while yields on shorter maturities have repriced sharply
1. Why every yield is rising
The host set the scene with the overnight moves — Japan's 10-year yield up more than six basis points, the UK's 10-year gilt up more than nine — and added that heavy new corporate issuance looked like another pressure point. Khurana agreed and made the issuance the first cause rather than an afterthought.
The volume of new corporate borrowing is the number he leads with. Khurana said "you have close to 2.3 trillion of IG corporate bonds coming this year, largely related to the hyperscalers" Investment-grade paper is debt from the highest-rated corporate borrowers, and the hyperscalers are the large cloud companies funding data centers
He treats it as one worldwide bid for capital rather than a corporate-bond story. "And so this is really a global phenomenon where there's a demand for debt that's pushing all yields higher, whether or not it's Treasuries, mortgages or corporate bonds."
2. Oil and rates stay higher
His second driver is the oil price, working through what central banks are then obliged to do. "The second is certainly just the continued pressure on oil and the fact that central banks are probably going to have to keep yields and rates higher for longer." That pressure lands hardest on yields at the shortest maturities: "And that's just putting pressure on the front end of yield curves as well."
3. The Fed's hand is forced
Asked what he assumes the Federal Reserve does next month and whether the market has it right, Khurana said the pricing looks reasonable and then went further than it.
He is comfortable with what is priced. About 60 basis points of increases over the next year, which he called pretty reasonable, and about a 70% chance of a quarter-point move in September
He read Kevin Warsh at Jackson Hole as heading toward increases while still expecting AI to bring inflation down. "My sense from Jackson Hole was that certainly Kevin Warsh is moving towards hikes. But somewhat he is very optimistic about the disinflation that can come from AI."
He classes these as insurance moves, which he said typically run to about 75 basis points. The label matters because insurance moves are taken against a risk rather than against inflation already in the data
The reason he thinks the Federal Reserve has no choice is a bond-market one, not an inflation one. "At this point, I almost think they have to, because if they don't, then they could lose control of the long end of the yield curve." "And so I think at this point, the market's forcing his hand to raise rates, even if he may not want to."
4. The 30-year barely moved
Asked what he prefers to own with so much paper to choose from, Khurana started with the part of the market that has not done what everyone assumes.
The 30-year yield, for all the coverage it gets, has been the steady one. "We've been in this kind of 5 to 5.25% range."
The repricing happened at the short maturities instead. "And what has really happened is the front end of the yield curve has really repriced substantially."
What that leaves him looking at is inflation-protected government debt at five years. "And so what you're seeing is TIPS, inflation-linked securities, five year real yields trading at currently around 2.2% real yields." A real yield is what the holder earns after inflation, so 2.2% is the return on top of whatever prices do
Bonus Insights
The host framed the coming increases as a reversal rather than a fight with inflation. His point was that a round of insurance increases would essentially undo the 75 basis points of insurance cuts delivered last year, which would not amount to chasing inflation. Khurana did not push back on the framing
The host also allowed that the arithmetic could change. Sufficiently weak inflation data, he said, would move the probabilities
Khurana's bottom line is that borrowing by the hyperscalers is what is lifting yields everywhere, and that the Federal Reserve has to raise rates in September to keep control of yields on the longest-dated government debt.
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