US bond yields surge past 5% on toxic mix of inflation, AI spending, and ballooning deficits

The 10-year US Treasury yield briefly touched 5.041% on September 15, a level not seen since July 2007. The 30-year yield crept toward 5.3%, a two-decade high. What’s driving the move isn’t any single catalyst. Persistent inflation, geopolitical conflict pushing oil prices higher, a federal government borrowing at wartime levels during peacetime, and an AI investment boom that’s sucking up capital at an extraordinary pace — economists have started calling this a “toxic stew” of converging pressures. The ingredients of the stew The Consumer Price Index grew 3.4% year-over-year as of August 2026 data, stubbornly above the Federal Reserve’s 2% target. Oil prices surged above $100 per barrel, driven by supply disruptions tied to the Iran conflict. The 10-year yield has climbed more than a full percentage point since the Iran conflict escalated, and more than half a percentage point since May alone. US federal debt now sits at roughly $40 trillion, with annual deficits exceeding $2 trillion — about 6% of GDP, a deficit ratio typically associated with recessions or major crises, not an economy still posting resilient growth numbers. Treasury Secretary Scott Bessent has expanded bond buyb...