Bonds won the election week, and the ballot box did half the work

The vote against the buildout

Voters across the United States delivered a clear verdict against rapid data centre expansion in this week's elections. Voters favoured restricting data centre development in 40 out of 41 local ballot measures across ten states on November 3, 2026, and in 2026, 46 out of 47 total ballot measures decided were in favour of data centre restrictions. DoubleLine Research notes the opposition reflects community concerns about electricity costs, water usage and quality of life. m:…7255

The vote matters to bond markets because the buildout it targets has become enormous. Annualised data centre construction spending has nearly doubled over the past year to $96.5 billion, excluding servers and computing equipment, and data centres contributed 5.9 percentage points to annual private nonresidential construction growth in September 2026. Overall construction spending growth was 2.3% in September 2026, and producer prices for electronic components and accessories increased 26.8% over the year through September 2026. m:…7255

Why that helps bonds

DoubleLine's argument runs through supply. Slower construction of data centres would mean less corporate bond issuance to finance the facilities and supporting power infrastructure. A slowdown in the AI buildout would likely result in less economic growth and lower inflation, and less bond issuance alongside weaker growth and lower inflation could ease pressure on long-term yields. That is the sense in which bonds won the election: the vote did not change what bonds pay, it changed how many of them the market will have to absorb. m:…7255

The stakes are large. The broader AI infrastructure buildout could exceed $10 trillion through 2032, according to DoubleLine, so even a modest slowdown changes the financing arithmetic by a wide margin. Every gigawatt not built is a bond that never gets issued, and every bond not issued is one less claim on the same pool of buyers. m:…7255

The money moved the same week

The flows followed the logic. Investors moved to bonds as a safety measure during the week of November 2 to 6, 2026, while a market selloff in stocks occurred and commodities experienced weakness, according to DoubleLine's Jeff Mayberry and Mark Kimbrough. The week was not a simple flight from risk, though: ISM manufacturing and services reports showed healthy activity, and strong October payrolls data increased the probability of a Federal Reserve rate hike at the December 9 meeting. m:…2200

The Fed hike probability for the December 9 meeting rose from 60% to 80% on the fed funds futures market. October payrolls data was strong, and payrolls data for the two months prior to October were revised upward. So bonds rallied in a week when the market also priced a higher chance of a rate rise: the safety bid and the hawkish repricing arrived together, and the safety bid won the week. m:…2200

The middle path: convertibles

For investors who want equity upside without full equity exposure, RBC BlueBay points to a market that has quietly become large. Convertible bonds offer the potential to generate equity-like returns with lower volatility and downside protection, and the global convertible bond market has reached a record level of $600 billion. The investor base is currently composed of approximately 60 to 65% hedge fund money, and the issuer base includes growth areas like AI, infrastructure and semiconductors. m:…4926

The terms show how strong demand for the structure has become: half of new convertible bonds issued in 2026 have priced with no coupon, and the average coupon for new convertible bonds has fallen to 1.8% in 2026. RBC BlueBay calls convertibles a middle stop for equity investors looking to de-risk without forfeiting upside participation. Goldman Sachs' Lou Miller gives the context: AI data centre stocks have declined 36% from their highs earlier this year, memory stocks are down 42%, optical networking stocks are down 46% and neocloud stocks are down 57%. Miller's prescription is the S&P 500 excluding AI for the next six months, and he anticipates a relaxed Santa Rally to close out the year. m:…4926 m:…2711