Yields on key US Treasury bonds reached new highs, but for the 10-year demand was especially strong

Yields on key US Treasury bonds hit record highs on Wednesday as a global sell-off of bonds intensified. The 10-year Treasury yield peaked at 5.36%, while the 30-year yield reached 5.73%, the highest levels since 2002. However, yield rates faltered later in the day after the US Treasury Department auctioned $39 billion worth of 10-year bonds, which saw a strong demand of $108 billion.

The auctioned bonds had a yield of 5.3%, the highest since November 2000. The Treasury Department sold $39 billion of 10-year notes during the auction, with indirect bidders, including central banks, taking 80.3% of the sale, above the average of 72.4% for the past ten auctions. Direct bidders purchased 17.1% of the notes, slightly below the average of 18.3%.

Dealers bought only 2.5% of the bonds offered, significantly below the average of 9.4%. Yields on government bonds in France and Italy also surged, reaching their highest levels in decades. IMF chief Kristalina Georgieva cautioned that governments must urgently address their record debt levels, predicting that global bond yields would remain pressured due to the rapidly expanding artificial intelligence sector.

Elon Musk's SpaceX plans to raise $40 billion to purchase AI chips from Nvidia, a move that could add to the mounting debt pressure on government bonds.