The Federal Reserve raised its benchmark rate by a quarter point on Wednesday, to 3.75-4%. But the rate that matters more for mortgages, corporate loans, and the federal government's interest bill is the 10-year Treasury yield, which the Fed doesn't set, has been rising for months, and just hit the psychologically terrorizing 5%. When a reporter asked Fed Chair Kevin Warsh what was behind that rise, he gave three reasons; one of which was due to the surge of AI debt swimming in the bond markets. "The so-called hyperscalers are out in the market raising funding," Warsh said. "And so the competition for capital is real. And I think it partly explains the increase in yields." The argument is simple: there is only so much money to lend at any given time.
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