Treasury Yields Reach Highest Levels Since 2002
On Wednesday, yields on benchmark US government debt pushed to their strongest levels in 24 years as a worldwide selloff in bonds accelerated. The 10-year Treasury yield touched 5.35%, and the 30-year reached 5.73% — both the loftiest readings since 2002. Yields move inversely to prices. Comparable European debt also sold off, with French and Italian benchmarks posting their steepest single-day gains since March, when the Iran war's outbreak shook markets, while the UK 30-year yield climbed to its highest since 1998.[S1][S2][S3][S4]
Stocks Slide as Oil Prices Add Pressure
Equities slid as the bond slump prompted traders to anticipate that costlier corporate debt would erode earnings. The pan-European Stoxx 600 dropped 1%, with French and German benchmarks each losing over 1% and Italy's FTSE MIB tumbling almost 2.5%. US indexes also weakened Wednesday morning, only a day after the Nasdaq and S&P 500 both finished at all-time peaks. Early on, the S&P 500 shed 0.6% and the Nasdaq Composite lost 0.8%. Meanwhile crude gained, with Brent up 1% to above $102 a barrel, heaping further pressure on yields.[S1]
IMF Warns on Debt as AI Borrowing Grows
For governments already facing sharply higher borrowing costs this year, the latest climb in yields brings added strain. Overnight, IMF managing director Kristalina Georgieva cautioned that authorities must act quickly to rein in their record debt loads. She also said global government bond yields would likely stay elevated, driven by the rapidly expanding artificial intelligence boom. In a Bloomberg Television interview, Georgieva noted that for 17 years policymakers had it easy because rates sat below GDP growth, and that this era has now ended.[S1]
Her remarks came after several reports that Elon Musk's SpaceX intends to borrow $40 billion to purchase AI chips from Nvidia. NBC News has not independently verified those reports, and SpaceX did not immediately respond to a request for comment. Should the plan proceed, that $40 billion in debt would add to the hundreds of billions already raised through bonds by AI-related firms in recent years, money used to construct data centers and stock them with equipment. Some economists warn such heavy private borrowing could further weigh on government bond yields.[S1]
France and US Lead Yield Increases
Ed Yardeni, who heads Yardeni Research, wrote Sunday that France could be heading toward a full-scale debt crisis, noting French 10-year yields have climbed more than those of any other major economy this year. The US ranks second, with Italy — long seen by bond markets as riskier — third. Apollo economic strategist Huw van Steenis said in a Wednesday note that hyperscalers have issued $48 billion in European-currency bonds this year, already over triple all of 2025. The Treasury will auction $39 billion of benchmark 10-year notes at 2 p.m. ET Wednesday, with investors watching closely.[S1]
