Washington is facing a growing challenge in the bond market as investors demand higher returns to lend money to the federal government while artificial intelligence giants ramp up borrowing to finance their infrastructure buildout.
The global bond selloff pushed the yield on the 30-year U.S. Treasury bond to its highest level since 2007 on Monday, while the 10-year Treasury yield climbed to a 19-month high, increasing the government’s borrowing costs and potentially making everything from mortgages to business loans more expensive for Americans. At the same time, companies including Amazon, Google and Meta are increasingly turning to debt markets to fund large artificial intelligence investments, pitting the federal government and corporations in a competition for investors’ money.
“All issuers — governments or hyperscalers alike — are now competing with more borrowers,” Tony Rodriguez, head of fixed-income strategy at Nuveen, told Bloomberg. “And therefore yields have to be higher.”
The U.S. government was approaching $40 trillion in national debt while facing high annual interest costs, making it increasingly expensive for Washington to finance federal debt as borrowing costs rise.
Treasury yields also serve as a benchmark for borrowing costs throughout the economy, meaning higher rates could make mortgages, business loans and other forms of credit more expensive for Americans.
The Treasury Department was scheduled to test investor demand Wednesday with a $16 billion auction of 20-year bonds, which could produce another record-high yield.
Technology companies are spending hundreds of billions of dollars on data centers, chips and other infrastructure, with some increasingly turning to debt markets to finance those investments.
Big Tech’s borrowing costs have also begun to rise as investors absorb the flood of new AI-related debt. Amazon had to offer investors an additional 18 to 21 basis points of yield on the longest-dated bonds in its $25 billion July offering, according to Yahoo Finance’s report on the sale.
Meta has also faced higher financing costs as investors grow more wary of the AI borrowing boom, with the Financial Times reporting that a $12 billion bond sale tied to a Texas data center was expected to offer yields of about 7.5%, roughly 0.4 percentage points higher than a similar Meta deal from October 2025.
(DCNF)