Analysis: AI bond issuance has limited impact on U.S. bond yields, and the 10-year yield may fall to 4.25% by the end of 2027

PANews reported on September 29 that Capital Economics analysis pointed out that the sell-off in U.S. debt was mainly due to changes in market expectations for recent interest rates. The 10-year U.S. Treasury yield is currently close to the high in June 2007. Economist James Reilly pointed out that this trend is more a reflection of rising oil prices and a strong U.S. economy, rather than being driven by artificial intelligence-related debt issuance or fiscal concerns.

Reilly predicts that with the Fed tightening less than investors currently expect, the 10-year U.S. Treasury yield will "fall sharply to 4.25%" by the end of 2027. He believes that although AI-related bond issuance will continue to put upward pressure on yields, the impact will not be as large as media reports suggest and will be offset by changes in monetary policy expectations. As for fiscal concerns, he added that there had been no substantive fiscal news recently that would trigger a sharp spike in yields.