The Kobeissi Letter@KobeissiLetter
The cost of financing US debt is rapidly rising:
On Tuesday, the US sold 30-year Treasury bonds at a 5.06% yield, the highest auction result since 2007.
At the same time, the 30-year Treasury yield jumped back above 5.00%, though it remains below the May 20th peak of 5.20%, the highest since July 2007.
By comparison, auctions for the same maturity were priced at around 2.00% in early 2022.
Long-term yields are increasing as the US debt burden expands, with heavier Treasury supply, rising inflation risks, and concerns over future borrowing needs forcing the government to pay more to attract investors.
Furthermore, the AI investment boom is adding another layer of pressure, as tech companies issue record amounts of debt to fund AI infrastructure, competing with the government for the same pool of capital and pushing long-term borrowing costs higher.
The US debt crisis is intensifying.
