US Debt Concerns Mount as 10-Year Treasury Yield Nears 5%

Long-ignored U.S. debt problems are starting to have real effects. According to Sina Finance, market analysts said a clear break above 5% in the 10-year U.S. Treasury yield could deal a major blow to the current artificial intelligence investment boom. The article said the U.S. has kept its fiscal deficit at about 6% of GDP in recent years, roughly twice the average of previous decades. Interest payments on public debt have more than doubled over the past five years, rising to more than 3% of GDP and a record high in U.S. history, while public debt has climbed to 100% of GDP, about three times the level in the late 1990s. The 10-year U.S. Treasury yield was around 4.8%. Analysts said a decisive move above 5%, the upper end of the range since the dot-com bubble era, could mark the start of a new era of monetary tightening. In that environment, financing large artificial intelligence projects would become more difficult, and some companies could be priced out of the debt market when major technology firms have to compete with the U.S. government for capital at yields above 5%. The article said annual revenue from AI applications this year is about $200 billion, while corporate spending on data centers and other infrastructure exceeds $1 trillion. AI companies are increasingly relying on new debt and equity issuance to fill funding gaps, and a 10-year Treasury yield above 5% would restrain both channels.