"U.S. Treasuries are no longer a special asset."

As reported by the American political media outlet Axios, this sobering reality lies behind the recent weeks-long surge in long-term bond yields. The status of U.S. Treasuries—traditionally regarded as the benchmark of global financial markets and the ultimate safe-haven asset—is being shaken, signaling that the U.S. government can no longer easily secure funding at low interest rates.

With long-term U.S. Treasury yields breaking through multi-decade highs this month, market experts point out that the capacity of markets to absorb U.S. government debt is reaching its limit. Rising bond yields signify falling bond prices, driven by heavy issuance and massive selling pressures that diminish their market value.

The core issue extends beyond the United States. Long-term sovereign bond yields in major economies such as South Korea, the United Kingdom, and Germany have similarly climbed to multi-decade peaks. Prolonged accumulations of national debt, compounded by protracted geopolitical conflicts like the Middle East wars, have heightened inflation expectations, which in turn fuel the upward momentum of bond yields. In response to mounting inflationary pressures, major central banks have shifted toward monetary tightening. Notably, the Bank of Korea raised its base rate for two consecutive months during its monetary policy meeting, pushing the benchmark interest rate to 3.0% for the first time in a year and a half. 

U.S. National Debt Surpasses $40 Trillion, Escalating Interest Burdens 

At the New York Stock Exchange, the yield on the 30-year U.S. Treasury bond closed at 5.182%, marking a significant increase from its opening level of 4.864% at the beginning of the year. Earlier in the month, the yield briefly crossed the 5.3% threshold, reaching its highest point in 19 years since the 2008 global financial crisis.

While the U.S. Treasury has shown intentions to stabilize long-term yields through market interventions, analysts note that these measures serve as temporary fixes. Historically, the U.S. has absorbed massive deficits backed by the global dominance of the U.S. dollar and Treasuries as reserve currencies. However, the recent spike in borrowing costs has thrust America's staggering debt burden into the spotlight. According to data released by the U.S. Treasury Department, total federal public debt surpassed a historic milestone, crossing $40 trillion for the first time. 

This accumulation stems from decades of fiscal expansion, originating from the early 2000s conflicts in Afghanistan and Iraq, sweeping tax cuts under the Bush administration, successive economic rescue packages following global financial shocks, and heavy spending during the COVID-19 pandemic, alongside recent defense and operational expenses tied to Middle East tensions.

Global Spillover Effects and Big Tech Bond Issuance

The upward pressure on yields is a global phenomenon. In South Korea, the yield on 30-year treasury bonds has climbed substantially compared to the start of the year, mirroring tightening conditions worldwide. Economists warn that persistent fiscal deficits—with the U.S. fiscal deficit hovering near 6% of its Gross Domestic Product (GDP)—exceed the sustainable 3% threshold typically monitored by financial markets. While historical post-WWII economic growth previously outpaced debt accumulation, the current velocity of debt growth risks pushing fiscal deficits past controllable limits.

Adding to the supply pressure in fixed-income markets, major technology giants such as Amazon, Alphabet (Google), and Meta have actively issued ultra-long-term corporate bonds to finance massive capital expenditures for artificial intelligence (AI) data centers. This dynamic forces governments and private corporations into direct competition for limited liquidity pools within global debt markets. Reports indicate that AI-heavy technology firms have issued hundreds of billions of dollars in corporate debt over the year to sustain infrastructure growth.

Broader Economic Implications and Necessary Adjustments

The global rise in bond yields generates widespread economic fallout. Beyond escalating corporate and government funding costs, it pushes up mortgage rates, directly increasing financial pressures on ordinary households. Furthermore, rising yields pose challenges for equity markets. When investors can secure risk-free returns exceeding 5% on U.S. government debt, the incentive to absorb higher risks in stock markets diminishes. Technology and growth-oriented sectors, whose valuations rely heavily on future earnings projections, remain particularly vulnerable to high-interest-rate environments.

Financial experts emphasize that as global sovereign yields trend upward, expanding the financial pressures on households, corporations, and governments alike, economic agents must re-evaluate and adapt their long-term financial decision-making strategies in alignment with permanently higher baseline interest rates.