US Borrowing Costs Hit Highest Level Since 2007

The effective interest rate on US government bonds over 10 years, known as the 10-year Treasury yield, has risen to a high of 5. 04% due to concerns about inflation caused by rising oil prices.

Global benchmark wholesale oil price rose to over $109 a barrel on Tuesday, up from around $86 at the end of August, after renewed concerns about Saudi Arabia's ability to export oil following rising tensions in the region.

Investors are anticipating US Federal Reserve Chair Kevin Warsh will raise interest rates to combat inflation caused by higher oil prices. However, US President Donald Trump opposes a rate hike, having long argued lower rates are great for boosting the economy.

Higher interest rates and inflation tend to drive up bond yields on government borrowing. Competition for debt from artificial intelligence firms is also driving up yields.

The effective interest rate on US government bonds over 10 years, known as the 10-year Treasury yield, rose to its highest level since 2007 after a jump in oil prices further fuelled concerns about inflation.

Competition for debt from AI firms is driving up yields on government borrowing, with tech giants borrowing massive piles of cash to build huge data centres. This raises interest rates on tech firm's debt which increases government bond yields in response.

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