- Long-term US Treasury yields have risen to their highest levels since 2007, with the 30-year bond yield trading above 5%.
- The rise in US borrowing costs has dragged yields higher for other countries, particularly affecting G7 nations.
- Silicon Valley companies are borrowing heavily to fund datacentres, contributing to an increase in bond supply.
- US national debt has reached £29.3tn for the first time, having doubled over the past decade, raising concerns about the sustainability of Trump's tax and spending plans.
- Anxiety over Trump's economic management and the US-Israel war on Iran are driving a sell-off in US bonds.
US Treasury yields have surged, with the 30-year bond exceeding 5% for the first time since 2007, driven by inflation fears and geopolitical tensions. This spike has raised global borrowing costs to their highest levels in decades, affecting countries like the UK, Germany, and Japan.
The US national debt has reached £29.3 trillion, raising concerns about the sustainability of President Trump's tax and spending plans. The ongoing conflict in the Middle East has further exacerbated inflation, impacting economic growth worldwide. Scott Bessent, the US Treasury secretary, attempted to calm investors, but his efforts were short-lived as yields resumed their upward trend.4
G7 nations are experiencing significant increases in borrowing costs, with UK 10-year bond rates nearing their highest since 2008 and Germany's rates at 2011 levels. Japan's borrowing costs have also hit their highest since 1996. Political risks are adding to investor anxiety, with questions surrounding Trump's commitment to managing soaring debt levels and similar concerns in the UK and France.
The AI boom is another factor, as Silicon Valley companies are heavily borrowing to fund their datacenter expansions, further pressuring bond markets. As central banks globally prepare to raise interest rates in response to inflation, the outlook for bond investors remains bleak.3
“The US national debt has hit £29.3tn, doubling over the past decade, fueling fears that Trump's tax and spending plans are unsustainable. Meanwhile, the AI boom is adding to bond supply as Silicon Valley companies borrow heavily for datacentres, and G7 nations face sharp yield increases.”
The Guardian
