Key facts
- US inflation expectations remain "well anchored," according to Federal Reserve Governor Christopher Waller.
- Waller stated that rising 10-year US Treasury yields are driven by economic growth, not inflation concerns.
- Investment in AI and data centers is supporting economic demand, Waller said.
- Academic research suggests US government debt may have lost some safe-haven status, potentially adding 50 to 70 basis points to yields.
Federal Reserve Governor Christopher Waller said on Tuesday that the recent climb in US bond yields is primarily a reflection of strong economic growth and investment in artificial intelligence, rather than heightened inflation expectations. Waller described inflation expectations as "well anchored."
Yields on 10-year US Treasury debt have reached 24-year highs, with some analysts attributing the rise to concerns about war-driven inflation, increasing government debt, and significant investment in AI. However, Waller downplayed the role of inflation in the bond selloff, emphasizing economic strength, AI spending, and broader debt concerns.