The bond market in Washington is encountering significant hurdles as investors seek higher returns for lending to the federal government, while major artificial intelligence firms increase their borrowing to support infrastructure projects.
The yield on the 30-year U.S. Treasury has climbed to its highest point since 2007 as of Monday, and the yield on the 10-year Treasury reached a 19-month peak following a global sell-off of bonds. This trend is raising borrowing costs for the government, which could consequently make things like mortgages and business loans pricier for Americans. Companies like Amazon, Google, and Meta are also looking to the bond market for funds to fuel their substantial investments in AI, resulting in competition for investors’ resources.
According to Tony Rodriguez, head of fixed income strategy at Nuveen, “All issuers, governments and hyperscalers alike, are now competing with more borrowers. So the yield has to be higher.”
The national debt of the U.S. is nearing $40 trillion, and with rising interest costs each year, it’s becoming more expensive for the government to manage its debt. Higher Treasury yields also influence borrowing costs elsewhere in the economy, which means elevated interest rates could lead to increased expenses for mortgages, business loans, and other credit options available to consumers.
The Ministry of Finance is testing investor demand with a recent $16 billion auction of 20-year bonds that could yield record high returns.
Technology firms are pouring hundreds of billions into infrastructure like data centers and chips, increasingly turning to the bond market for financing these initiatives. However, as investors start to absorb substantial AI-related debt, the costs of borrowing for large tech companies are beginning to rise as well. For instance, Amazon had to increase the yield by 18 to 21 basis points on its longest bond during a $25 billion offering back in July.
Meanwhile, Meta is also experiencing increased funding costs as investor confidence wavers in the booming AI borrowing market. Reports indicate that a $12 billion bond sale associated with a Texas data center is anticipated to yield around 7.5%, which is roughly 0.4 percentage points higher than another similar deal from Meta that began in October 2025.
