US borrowing costs reach new highs amid inflation fears

The US government is paying more to borrow money than it has in nearly two decades, and the bill is getting harder to ignore. The 30-year Treasury yield has climbed to roughly 5.23% to 5.34%, a level the bond market hasn’t seen since 2007, while the 10-year yield has pushed to around 4.79% to 4.80%. What’s driving yields higher First, inflation remains stubbornly elevated. Recent readings have landed between 3.4% and 4.1%, well above the Federal Reserve’s 2% target. That persistent gap between where inflation is and where the Fed wants it has kept bond investors demanding higher yields as compensation. Second, renewed tensions in the Middle East have pushed oil prices higher, feeding directly into inflation expectations. Third, and perhaps most underappreciated, is the sheer volume of corporate borrowing tied to artificial intelligence infrastructure. Companies across the globe have been issuing hundreds of billions of dollars in debt to fund AI buildouts in 2026. All that issuance competes with government bonds for investor dollars, which means the Treasury has to offer more attractive yields to find buyers. The Fed’s tightrope walk Federal Reserve Chair Kevin Warsh has held the p...