US Deficit Remains a Major Force Behind Rising Treasury Yields

Stronger-than-expected US growth and the AI investment boom can help explain rising Treasury yields, but the federal deficit remains a major factor.
With the US deficit running around 7.5% of GDP, the government must continue issuing enormous amounts of debt into the market.
That supply requires investors to absorb more Treasuries and can push yields higher as buyers demand greater compensation. The bond selloff is therefore not only a growth or inflation story. Fiscal policy remains central to the repricing.