Bloomberg Says 4-5% US Bond Yields Are Becoming the New Normal on Surging Debt and the AI Boom

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โดย Money & Banking·USEU·Read original
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Bloomberg Economics assesses that US Treasury yields in the 4-5% range are likely to become the new normal, after structural forces that kept borrowing costs low for decades began to reverse: shrinking global savings, surging public debt, and rising AI infrastructure investment. Its latest calculations estimate that the real natural rate of interest rose to nearly 2.6% in the second quarter of 2026, which when combined with inflation is consistent with a 10-year bond yield of about 4.7% under stable inflation. With the 10-year bond yield in the current market at around 4.8%, it is close to the level supported by economic fundamentals. The main pressure comes from government borrowing, especially in the United States, where federal debt held by the public has risen to more than 100% of GDP from 79% before the COVID-19 pandemic in 2020, and is expected to reach 111% of GDP by 2030. Meanwhile, European NATO members have announced raising their defense spending target to 3.5% of GDP from 2%, which Bloomberg Economics estimates could add 1 trillion to 3 trillion dollars to Europe's debt burden over the next 10 years. China's foreign exchange reserves, which once reached nearly 4 trillion dollars in 2014, have fallen to about 3.4 trillion dollars. The impact is not limited to the bond market, because the US government must bear a heavier fiscal burden, with interest payments already accounting for more than half of the budget deficit. Homebuyers face higher mortgage rates, and companies face heavier refinancing costs from hundreds of billions of dollars in pandemic-era corporate debt maturing over the next two years.

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