US Treasury Yields Climb to 2007 Highs as Inflation Stays Sticky and AI Borrowing Swells

US borrowing costs are back near levels not seen in almost two decades, putting fresh focus on the government's growing interest burden. The 30-year Treasury yield has risen to about 5.23% to 5.34%, the highest since 2007, while the 10-year yield is holding around 4.79% to 4.80%. Several forces are pushing yields higher. Inflation remains well above the Federal Reserve's 2% target, with recent readings running between 3.4% and 4.1%. That gap has kept investors demanding more yield to offset purchasing-power risk. Higher oil prices linked to renewed Middle East tensions are also reinforcing inflation expectations. A less discussed factor is the scale of corporate debt issuance tied to artificial intelligence infrastructure. Companies worldwide are issuing hundreds of billions of dollars of debt to finance AI buildouts in 2026. That wave of supply competes directly with Treasurys for investor capital, leaving the US government needing to offer higher yields to attract buyers. Markets are closely tracking the Fed's next move. Federal Reserve Chair Kevin Warsh has kept the policy rate steady at 3.5% to 3.75% over several consecutive meetings. Investors are now pricing a 60% to 65% chance of a rate increase at the September 16 meeting. The stakes are rising as US national debt exceeds $40 trillion. Even a 1-basis-point move higher in yields can add billions of dollars to annual interest costs. The Treasury has expanded bond buyback programs aimed at supporting market liquidity, but the measures have not yet materially pulled the yield curve lower. Higher US yields are also rippling through global markets, with government bond yields in Japan, the UK, and Germany reaching new highs. For US households, the most immediate impact is in mortgages: with the 10-year yield near 4.8%, 30-year fixed mortgage rates remain elevated, cooling housing activity.