Global bond yields rise amid inflation and AI investment demand

Global long-term borrowing costs are rising significantly as bond yields reach multi-decade or historic highs. In the United States, 30-year Treasury yields have climbed to levels not seen since 2007, while in France, financing costs have hit peaks not observed since 2008. Germany has seen 10-year yields return to 2011 levels, and the United Kingdom is approaching 6% for long-term gilts. Japan is also seeing yields near historic maximums.

This structural shift is driven by several intersecting factors. Persistent core inflation, particularly in the US and Europe, remains a primary driver as wage growth in sectors like hospitality and healthcare keeps service prices elevated. Additionally, there is intense competition for capital; governments are issuing massive amounts of debt to fund increasing deficits, while major technology companies—including Amazon, Alphabet, and Meta—are issuing large volumes of bonds to finance infrastructure for artificial intelligence, such as data centers and semiconductors.

Demographic shifts, specifically aging populations, are further increasing pressure on public spending, contributing to the overall upward trend in the cost of money.