BlockBeats News, October 9: U.S. long-term Treasury yields have continued to climb, with market focus shifting from the Federal Reserve’s rate-hike path to the term premium. A New York Fed model shows that the term premium on 10-year U.S. Treasuries has risen by about 40 basis points since mid-September, to around 0.98%, its highest level since 2014. Over the same period, the 10-year Treasury yield rose by about 30 basis points. Another model that incorporates economists’ interest-rate forecasts shows the term premium has climbed to 1.08%, its highest level since 2010.

The term premium reflects the additional return investors demand for taking on uncertainties such as long-term inflation, fiscal risks, bond supply, and market liquidity. Analysts say the recent rise in long-term yields may no longer be driven solely by expectations for Fed policy, but may instead reflect investors demanding greater risk compensation for holding long-term U.S. Treasuries.

The U.S. annual fiscal deficit is about $2 trillion, and the government continues to issue Treasury bonds. At the same time, AI infrastructure development is driving tech giants to increase their debt financing. According to Reuters data, Alphabet, Amazon, Meta, Microsoft, and Oracle have issued about $220 billion in debt this year—more than double the amount over the same period last year. Competition between governments and companies for long-term capital could further drive up borrowing costs.

If the term premium continues to rise, long-term U.S. Treasury yields may not fall significantly even if the Federal Reserve pauses rate hikes or lowers its expectations for future interest rates, leaving sustained pressure on mortgages, corporate loans, and economic activity. Analysts say fiscal expansion, increased debt issuance, and geopolitical uncertainty may signal a structural shift away from the environment of steadily declining long-term interest rates that prevailed for more than a decade.