AI infrastructure financing pushes up long-term bond yields; the U.S. Treasury may adjust debt issuance duration to ease market pressure.

In the two long-bond auctions in October, the U.S. Treasury fully used its $6 billion buyback cap both times, but still could not prevent long-end yields from rising. After the 30-year U.S. Treasury yield broke above 5.6%, the Treasury plans to reduce the size of coupon-bearing auctions for maturities beyond 10 years and direct more of its new financing toward short-term Treasury bills. Several research institutions believe that unless AI (artificial intelligence) investment and corporate financing demand cool substantially, the supply-demand pressure in the U.S. long-bond market will be difficult to significantly ease, and elevated long-bond yields may become the new normal going forward.