The 10-year Treasury yield is at its highest in nearly two decades. How we got here — SkimNews
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- 10-year Treasury yield jumped to 5.23% on Friday, its highest level since 2007, up from just below 4.8% earlier this month.
- CME FedWatch data shows Fed funds futures pricing a 64% probability of a rate hike at the Fed's October meeting, reflecting a market repricing toward additional tightening.
- University of Michigan consumer sentiment index recorded year-ahead inflation expectations at 4.6% in September, up from 4% in August and the highest reading since June.
- Macquarie Group's Thierry Wizman argued bond supply—not inflation—is the dominant driver of yields this year, noting the Fed isn't tightening aggressively and inflation expectations aren't extreme.
- Vanguard estimates Alphabet, Amazon, Meta, Microsoft, and Oracle collectively issued roughly $132 billion of debt through July, compared with a $35 billion annual average between 2020 and 2024.
- Broader AI-related debt issuance could reach $300 billion to $570 billion this year as data-center, semiconductor, and utility companies borrow to finance the AI buildout.
- Wizman warned yields could climb further because hyperscaler capital-spending plans are likely to keep elevated bond issuance running through next year.
Why it matters: Yields at their highest since 2007 raise borrowing costs economy-wide—from the 10-year-influenced mortgage market to corporate balance sheets. This cycle is structurally different: the roughly $132 billion issued by five AI hyperscalers through July is nearly four times their 2020–2024 annual average, flooding the bond market with supply beyond anything inflation or Fed policy alone would explain.
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