Surge in US Long-Term Treasury Yields, Diverging Interpretations from Fed and Wall Street

The yield on US long-term Treasury bonds has risen to its highest level in years, with the 10-year note at 4.814% and the 30-year note at 5.28%. Federal Reserve officials have analyzed that investments in AI and data centers are driving strong economic growth, while Wall Street attributes the rise to increasing oil prices, inflation, fiscal deficits, and a surge in Treasury supply. John Williams, President of the New York Federal Reserve Bank, explained that the rise in rates reflects the strength of the economy. Fed Chair Kevin Warsh also mentioned the increase in long-term rates against the backdrop of a strong economy, noting that corporate capital investment and consumer spending remain robust. In contrast, Wall Street sees fiscal deficits and corporate bond issuance driven by AI investments as factors pushing long-term rates higher. Ben Emons, CIO, pointed out that corporate bonds for AI investments are competing with US Treasuries, adding that the US government debt exceeding $40 trillion is also a burden. Joseph Brusuelas, Chief Economist at RSM, analyzed that rising oil prices are increasing risks related to inflation and fiscal sustainability. There are also differing opinions within the Fed, with Fed Governor Chris Waller warning that high debt could lead investors to demand higher yields. Emons suggested that the yield on the 10-year Treasury could exceed 5% by the end of the year.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.