US Treasury Sell Alert Upgrades: Term Premium Reaches a Decade High, Finance and AI Bond Issuance as Drivers BlockBeats reported that on October 9, the yield of US long-term treasury bond bonds continued to rise, and the focus of the market was shifting from the path of the Federal Reserve to term premium. The New York Federal Reserve model shows that the premium on the 10-year US Treasury bond has risen by about 40 basis points since mid September, reaching around 0.98%, the highest level since 2014; The yield of 10-year US Treasury bonds rose by about 30 basis points during the same period. Another model included in economists' interest rate forecasts shows that the term premium has risen to 1.08%, the highest level since 2010. The term premium reflects the additional returns demanded by investors due to uncertainties such as long-term inflation, fiscal risks, bond supply, and market liquidity. Analysts point out that the recent increase in long-term yields may no longer be solely driven by Federal Reserve policy expectations, but rather reflect investors' demand for higher risk compensation for holding long-term US bonds. The annual fiscal deficit of the United States is about $2 trillion, and the government continues to issue treasury bond; At the same time, the construction of AI infrastructure is driving tech giants to increase debt financing. According to Reuters data, Alphabet、 Amazon Meta、 Microsoft and Oracle have issued approximately $220 billion in debt this year, more than double the level of the same period last year. The simultaneous competition between the government and enterprises for long-term capital may further push up financing costs. If the term premium continues to rise, even if the Federal Reserve suspends interest rate hikes or lowers future interest rate expectations, long-term US bond yields may not significantly fall, thereby creating sustained pressure on housing mortgages, corporate loans, and economic activity. Analysts believe that fiscal expansion, increased debt supply, and geopolitical uncertainty may indicate structural changes in the environment where long-term interest rates have continued to decline over the past decade. [Original link]