Washington and AI debt deluge is rinsing consumers

Competition for capital is fierce, with prices to match. Global bond markets are awash not only with reams of government debt, the consequence of towering deficits, but also issuance from technology titans funding the AI boom. Long-term U.S. Treasury yields have adjusted accordingly, with the 30-year reaching 5.3% on Tuesday, the highest since 2007. With Washington and Big Tech showing no signs of pulling back, consumer credit demand is most likely to suffer from rising costs. A disappointing home-buying season indicates it’s already happening.

The White House seems aware of the risk that the government, corporations or consumers will eventually have to blink. Yields dropped back somewhat on Wednesday, after the Treasury Department said that it would increase repurchases of longer-term bonds. It’s a sign of Secretary Scott Bessent’s increasingly hands-on attitude, after intervening to stabilize the yen earlier this month, potentially forestalling a sell-off of $1.1 trillion in U.S. debt owned by Japanese holders.