U.S. Treasury yields rise to a 24-year high.
U.S. Treasury yields rose to a 24-year high, with the market focusing on the financing needs of the AI industry, interest rate trends, and the impact of interest rate hike risks on global financial markets.

International Finance / Wire Reports — US Treasury yields continue to climb, confronting global financial markets with uncertainty over the interest-rate outlook, government debt and financing for artificial intelligence (AI) investment. A Reuters Morning Bid analysis published on Oct. 8 said Treasury yields had recently reached their highest levels in years, prompting markets to reassess the Federal Reserve's future rate policy. At the same time, financing deals arranged by technology companies to expand AI infrastructure are raising fresh questions about whether the investment boom can continue.

According to Reuters, the 10-year US Treasury yield briefly rose to a 24-year high on Oct. 7. Minutes of the Fed's September meeting showed that most policymakers believed further rate hikes might still be needed to bring inflation down.

Although markets have recently modestly scaled back expectations for continued Fed tightening, they still expect as many as three rate hikes over the coming year, with December seen as one possible starting point. Fed official Christopher Waller also said further increases might be necessary to bring inflation back to the 2% target, while adding that the pace of hikes remained open to adjustment.

Long-term Treasury yields reflect wider risks

Beyond Fed policy, investor uncertainty over US government debt, political risks and long-term fiscal financing is also affecting the Treasury market.

Reuters said the term premium on 10-year US Treasuries had recently risen to its highest level since 2014. The term premium is the additional compensation investors demand for holding longer-term bonds, beyond their expectations for changes in interest rates.

When investors become more concerned about long-term inflation, the scale of government borrowing or future fiscal policy, they may require higher yields before agreeing to hold long-term Treasuries. Rising yields mean the government and companies may face higher funding costs when they issue bonds in the future.

US Treasury Secretary Scott Bessent has attributed recent volatility in the bond market to global factors rather than to problems specific to the United States. However, market concerns over the country's long-term debt and fiscal outlook remain an important influence on yields.

AI industry's debt financing expands

As bond markets come under pressure, the scale of technology companies' fundraising for AI development is also drawing continued attention.

Reuters reported that a new debt-financing arrangement had emerged between Broadcom and OpenAI. Earlier, SpaceX and Nvidia were also reported to be arranging as much as about US$40 billion in chip financing. Broadcom and Anthropic were reportedly discussing debt financing on a similar scale.

These deals show that the AI industry's expansion depends not only on companies' own cash flow, but also on increasingly close financial arrangements among suppliers, customers and lenders. As chip suppliers and AI companies use financing to support each other's expansion, investors will pay closer attention to how the funds are used, borrowers' ability to repay and whether revenue from AI services can keep pace with infrastructure spending.

If AI demand and corporate earnings continue to grow, the related investment may remain supported. But if revenue growth falls short of expectations or borrowing costs rise further, companies could face greater financial pressure. Reuters said this made the coming earnings season particularly important.

TSMC revenue beats expectations, while Samsung shares remain under pressure

The performance of Asia's semiconductor industry has also become an important gauge of global investor demand for AI.

Reuters said Taiwan Semiconductor Manufacturing Co. (TSMC) had reported quarterly revenue that again exceeded market expectations. South Korea's Samsung Electronics, meanwhile, reported operating profit growth of more than 700% year on year. Samsung shares nevertheless fell more than 1% as markets worried that the pace of future growth and the rally in chip prices could slow.

This shows that even when a company's financial figures are strong, investors still assess whether growth can continue and whether expectations have already been fully reflected in the share price. For Taiwan's semiconductor industry, order and revenue growth driven by AI demand is important, but global interest rates, technology companies' financing capacity and customers' capital-spending plans could also affect market sentiment ahead.

Market focus shifts to inflation and corporate earnings

Investors will continue to watch US employment data, auctions of long-term Treasuries and comments from Fed officials to assess the possible direction of interest-rate policy. Technology companies' earnings will also be crucial for evaluating returns on AI investment.

Overall, rising US Treasury yields and expanding AI financing reflect a global financial market facing both higher funding costs and rapid growth in technology investment. The market's future direction will depend on inflation, Fed policy, corporate earnings and whether AI demand can continue, rather than on any single indicator.