Did Bonds Just Win the Election?

The 2026 U.S. local elections point to a slower and more expensive data center buildout, which could reduce growth and inflation pressure and support bonds.

• Voters backed restrictions on data centers in 40 of 41 ballot measures across 10 states on November 3, bringing the 2026 total to 46 of 47 measures.
• Data centers contributed 5.9 percentage points to annual private nonresidential construction growth in September, while the rest of the sector reduced growth by 3.7 percentage points and overall construction spending rose 2.3%.
• Annualized data center construction spending nearly doubled over the past year to $96.5 billion, excluding servers and computing equipment; one study projects broader AI infrastructure investment could exceed $10 trillion through 2032.
• Electricity prices have risen faster than overall consumer prices over five years, while producer prices for electronic components and accessories increased 26.8% in the year through September.
• Greater scrutiny could bring fewer tax concessions, higher infrastructure fees, longer permitting timelines and higher local taxes, increasing the cost of new capacity and potentially raising the value of existing facilities with secured power.
• Slower construction would reduce corporate bond issuance for data centers and related power infrastructure, while weaker growth and lower inflation could ease pressure on long-term yields.

Takeaway: Political resistance may slow the AI infrastructure cycle enough to weaken an important source of economic growth and inflation, creating a more favorable backdrop for bonds even if AI investment continues.