Archive · 10 Oct 2026
Five Forces Deepen Pressure on US Treasury Bonds
US government bonds are paying higher interest than they have in more than 20 years.
This is happening because many investors are selling them.
Companies building AI data centres are borrowing a lot of money, and some investors sell government bonds to manage that borrowing.
Mortgage investors may also sell bonds when interest rates rise.
Higher oil prices could make many things more expensive, which may keep inflation high.
The Federal Reserve has raised interest rates and investors are watching for more increases.
The government’s large borrowing needs are another reason investors may want higher returns.
Still, some buyers may be attracted by the high interest payments.
The market is watching to see whether selling continues or buyers step in.
The 10-year Treasury yield is near 5.23%, and the 30-year yield is around 5.61%; both are at levels last seen more than 20 years ago.
Investors are buying options to guard against further rate rises, while heavy AI-company borrowing can lead to Treasury selling or hedging.
Mortgage investors may sell Treasury futures to adjust interest-rate protection as rising rates make mortgage-backed securities more sensitive.
The 10-to-30-year yield gap widened to about 37 basis points, amid demand for extra compensation to hold longer-term debt and concerns about government finances.
The Fed raised its target rate range to 3.75%–4.00%; high oil prices and inflation worries have raised expectations of further increases.
- Who
- US Treasury bond investors, the Federal Reserve and companies borrowing to expand AI infrastructure.
- What
- A Treasury selloff has pushed 10-year and 30-year yields to levels not seen in more than two decades.
- When
- The reported yield increases followed the start of the US-Iran war in February; the article also reports a Fed rate decision on September 16.
- Where
- The US bond market.
- Why
- Selling pressure reflects rate concerns, AI-company borrowing, mortgage hedging, rising oil-driven inflation worries and concern about government borrowing.
Reasons the selloff may continue
Reasons buyers may return
Direction of Treasury yields
Reasons the selloff may continue
Investors are seeking protection against higher rates, while borrowing, mortgage hedging, inflation worries and government debt concerns could add to selling.
Reasons buyers may return
Some investors believe elevated yields could attract buyers seeking to lock in returns not seen for more than two decades.
- 10-year Treasury yield
- Near 5.23%, up around 135 basis points since the US-Iran war began in February.
- 30-year Treasury yield
- Around 5.61%, roughly 110 basis points above its March low.
- Yield history
- Both yields are at levels last seen more than 20 years ago.
- Hyperscaler debt forecast
- Goldman Sachs forecasts hyperscalers could issue a record $420 billion in debt next year.
- 2026 federal deficit projection
- The Congressional Budget Office projected $1.9 trillion, or 5.8% of GDP.
- Oil price
- Crude oil remained above $105 a barrel on the day of the Fed decision, about 50% above its pre-war level.
- Fed decision
- The Fed raised its target range by a quarter percentage point to 3.75%–4.00%, its first increase since 2023.