Data cited by Kobeissi Letter showed the latest auction yield on the US 30-year Treasury climbed to 5.06%, the highest level since 2007, pushing long-dated Treasury yields back above 5%. That compares with roughly 2% for the same maturity at the start of 2022. The move has drawn market attention because higher long-term yields lift the risk-free rate and raise discount rates used to value risk assets, creating structural pressure for Bitcoin and similar high-risk trades. The report also noted that risk-free yields above 5% have raised the hurdle rate for speculative capital allocation. At the same time, wider fiscal deficits are increasing debt financing costs and, in the near term, sending a risk-off signal to markets. Another factor in the funding squeeze is the boom in artificial intelligence infrastructure spending. Large technology companies continue to issue bonds to fund AI buildouts, competing with the US government for market capital and putting additional upward pressure on long-term rates. Markets are now watching the 5.2% level, which marked a high in May this year. A break above that point could indicate that long-term rates still have room to move higher and that financial conditions may tighten further.
Data cited by Kobeissi Letter showed the latest auction yield on the US 30-year Treasury rose to 5.06%, the highest level since 2007, pushing long-term Treasury yields back above 5%.
For comparison, yields on the same maturity were around 2% at the start of 2022.
Higher long-end yields raise pressure on risk assets
The analysis said higher long-term yields mean a higher risk-free rate, which lifts the discount rate applied to risk assets and creates structural pressure on Bitcoin and other high-risk assets. Risk-free yields above 5% have also raised the threshold for speculative capital allocation.
At the same time, rising debt financing costs tied to a wider fiscal deficit are sending a near-term risk-off signal to the market.
AI funding demand adds to competition for capital
The report added that the boom in artificial intelligence infrastructure investment is intensifying competition for funds. Large technology companies continue issuing bonds to finance AI buildouts, competing with the US government for market capital and pushing long-term rates higher.
Market watches the 5.2% level
Markets are focused on 5.2%, the high reached in May this year. If yields break above that level, it could signal that long-term rates will continue rising and that financial conditions will tighten further.
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