Federal Reserve Chair Kevin Warsh attributed the rise in 10-year Treasury yields to three factors: AI hyperscalers competing for capital, economic growth, and geopolitics tied to the Iran conflict. The five major hyperscalers (Amazon, Microsoft, Alphabet, Meta, and Oracle) issued 121 billion dollars in U.S. corporate bonds in 2025, compared with an annual average of 28 billion dollars between 2020 and 2024. Morgan Stanley estimates AI-related global debt reached nearly 236 billion dollars by the end of May, and forecasts it will approach 570 billion dollars for the full year of 2026. Simultaneously, the Federal Reserve raised its benchmark rate by a quarter point to 3.75-4%, while the 10-year Treasury yield hit the psychologically significant 5% level.
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