David Zervos, a senior advisor to US Treasury Secretary Bessent and a Wall Street veteran, said on Thursday that although US Treasury yields have recently surged to multi-decade highs, current real yields are already notably elevated by historical standards and there is room for them to fall in the future.

He believes the surge in artificial intelligence (AI) infrastructure investment and energy price shocks are important factors driving the recent rise in yields, but the related pressures may only be temporary.

In an interview, Zervos said: "By any historical measure, real yields are very high right now, so I think there is still some room for them to decline in the future."

Recently, the US Treasury market has come under sustained pressure, with both 10-year and 30-year Treasury yields rising to 24-year highs. At the same time, global bond yields have also broadly moved higher, mainly driven by market expectations of further interest rate hikes by central banks and by companies continuing to expand financing for AI infrastructure.

The rapid climb in Treasury yields has already begun to affect US consumers' borrowing capacity. As Treasury yields rise, consumer loan rates such as mortgage rates also increase, leading to weaker demand for mortgage applications. Recently, US mortgage rates have approached three-year highs, further adding to homebuyers' financing burden.

On monetary policy, the Federal Reserve implemented its first rate hike in three years last month. Policy signals released this week showed that Fed officials believe further rate increases may still be needed before the end of the year to address persistent inflation pressures. According to the CME FedWatch tool, interest rate futures markets currently expect more than an 82% probability that the Fed will raise rates again at its December meeting.

However, Zervos pointed out that although the Fed and other major central banks have responded to rising short-term rates, market expectations for long-term rates and inflation have not changed much. This means the recent sharp swings in bond yields do not necessarily represent a fundamental shift in the long-term interest rate trend.

In addition to monetary policy factors, Zervos believes that large-scale investment by technology companies in AI infrastructure is also one of the reasons driving global real interest rates higher. As major technology companies continue to increase investment in data centers, computing facilities and related energy infrastructure, corporate financing demand continues to grow, putting some pressure on global capital markets.

In the interview, Zervos referred to artificial intelligence as "Super Intelligence," a term the Trump administration has recently favored. However, Zervos, who previously worked at Jefferies and the Federal Reserve, believes that massive capital investment in AI is generally a positive signal for the US economy. Although related financing demand may push bond yields higher in the short term, these investments are also expected to drive technological progress and long-term economic growth, so the trend should not be viewed solely through the lens of rising borrowing costs.

At the same time, rising energy prices are also an important reason for recent pressure in the bond market. Zervos said the war between the United States and Iran triggered an energy supply shock, pushing international oil prices significantly higher and intensifying market concerns about inflation. Data shows that from the outbreak of the conflict to Wednesday of this week, the international crude benchmark Brent crude price rose by about 38% cumulatively. Higher oil prices not only directly increase energy costs, but may also pass through to overall prices through transportation, production and other channels, thereby affecting market expectations for inflation and central bank rate policy.

However, Zervos expects that as the energy shock gradually eases, bond yields are also likely to fall back from current highs. He said the market may still need to endure pressure from higher interest rates in the short term, but this situation is unlikely to persist permanently.

Zervos also emphasized that the recent rise in bond yields is not unique to the United States. Government bond yields in major economies such as Germany, France, Italy and Japan have also risen notably, indicating that global bond markets are being jointly affected by changes in monetary policy expectations, energy prices and corporate financing demand. He believes that, compared with other developed economies, the United States has performed relatively steadily in this round of global interest rate increases.

Zervos said: "This is not a problem unique to the United States."