Global bond yields surge amid rising debt and AI investment demands

Global bond markets are experiencing a significant surge in long-term yields, driving up borrowing costs for major economies. In the United States, the 30-year Treasury yield reached 5.32%, its highest level since 2007. Similar trends are visible in Europe, where French borrowing costs hit levels not seen since 2008, German yields returned to 2011 levels, and British gilts approached 6%. Japan is also seeing long-term yields near historical highs.

Several structural factors are driving this volatility. Investors are concerned about persistent inflation, large fiscal deficits, and rising public debt as governments borrow heavily to fund social spending, defense, and infrastructure. Additionally, the massive capital requirements for artificial intelligence—driven by tech giants like Alphabet for data centers and energy infrastructure—are increasing competition for capital, forcing governments to offer higher yields to attract investors.

Furthermore, traditional buyers such as pension funds are gradually reducing their holdings of long-term government debt. This shift, combined with global supply chain risks and demographic changes, has created a landscape where interest rates may remain elevated for an extended period.