A combination of escalating geopolitical tensions in the Middle East, rising risks of government fiscal deficits, and intense investment in artificial intelligence has caused the 10-year US Treasury yield, a key benchmark for borrowing costs, to spike sharply to 4.7%. This marks the highest level since US President Donald Trump began his second term.

Analysts point out that the rising bond yields are increasing financing costs for businesses and households across the country, substantially limiting the Trump administration's earlier promises to lower overall societal costs and improve affordability for the public. US Treasury Secretary Scott Bessent has previously described the 10-year Treasury yield as a "barometer" for policy effectiveness, but its current trajectory shows that hopes for lower financing costs are being offset by market concerns over inflation and debt.

The surge in benchmark rates has had a direct impact on the real economy, particularly the housing market. The latest data from mortgage giant Freddie Mac shows that the average rate on the most common 30-year fixed mortgage has climbed to 6.58%. Senior economist Nancy Vanden Houten at Oxford Economics stated that with households already facing pressure from rising energy and food prices, further increases in borrowing costs will continue to squeeze consumer spending and hamper the recovery of the housing market.

Regarding the drivers behind this yield spike, market analysis suggests that geopolitical conflicts pushing up oil prices and fueling inflation expectations are only one trigger. The deeper issue lies in concerns over global fiscal imbalances and high public debt. The current US government debt has approached $40 trillion, and with expectations of increased military spending, the market is demanding higher risk premiums. Strategic analysts at institutions like Barclays and Société Générale note that sovereign bond yields worldwide, including UK Gilts and Japanese long-term bonds, are rising in tandem, reflecting widespread anxiety over government debt expansion and the sustainability of fiscal deficits in many countries. Additionally, the large amount of credit absorbed by AI infrastructure construction is objectively pushing up the marginal borrowing cost across the entire economy.

With market inflation expectations persistently rising, the direction of the Federal Reserve's monetary policy is under close scrutiny. Industry insiders warn that if the policy-making body, led by Fed Chair Kevin Warsh, fails to take strong measures to curb inflation risks in a timely manner, the market's concerns about long-term inflation could intensify further, driving medium- and long-term bond yields even higher.