Arabic version: عائد سندات الخزانة يبلغ أعلى مستوى في 19 عاماً مع نمو المعروض من السندات

According to Cnbc, the benchmark 10-year Treasury yield rose to 5.23% on Friday, its highest level since 2007. The yield had been just below 4.8% earlier in the month. Bond yields and prices move inversely, and the sharp move has unsettled investors.

Sticky inflation and expectations for further Federal Reserve tightening have contributed to the increase. Fed funds futures indicated a 64% likelihood of a rate hike in October, according to the CME FedWatch tool. The University of Michigan’s consumer sentiment index showed year-ahead inflation expectations rose to 4.6% in September from 4% in August, the highest reading since June.

Thierry Wizman, global FX and rates strategist at Macquarie Group, said bond issuance has become a larger factor in the rise in yields this year. The federal government is issuing debt to finance a large deficit, while companies are borrowing to fund artificial intelligence infrastructure. Wizman said the added supply has put upward pressure on yields.

Vanguard estimated that Alphabet, Amazon, Meta Platforms, Microsoft and Oracle issued about $132 billion of debt through July, compared with a roughly $35 billion annual average from 2020 through 2024. Broader AI-related debt issuance could reach $300 billion to $570 billion this year as companies in data centers, semiconductors and utilities finance buildouts. Higher yields can increase corporate borrowing costs and make bonds more attractive to income-seeking investors. Wizman said spending plans by hyperscalers and suppliers could keep issuance elevated through this year and into next year, adding that yields could rise further.