Yields Surge, Rate Hike Bets Rise | Real Yield 7/23/2026

Summary

The episode covers a bond sell-off that pushed 30-year Treasury yields above 5% for the longest stretch since 2007, fueled by oil-led inflation and rising Fed rate-hike bets. Apollo’s Torsten Slok discusses tight labor markets and tariff pressures, while the ECB signals readiness to hike in September. A credit roundtable with Pimco’s Lotfi Karoui and Vanguard’s Colleen Cunniffee examines the surge in AI-funded debt, concentration risks, and the case for selectivity. Other segments explore UK gilt volatility under new PM Burnham, Blackstone’s private credit trends, NFL private bond issuance, and local pushback against AI data centers.

• 30-year Treasury yield holds above 5% for 28 days this year, most since 2007, as inflation fears return.
• Oil rally and sticky 3.5% core inflation push market-implied probability of a Fed rate hike next week toward 40%.
• ECB holds rates but opens door to a September hike; UK gilt market rattled by new PM’s comments on fiscal flexibility.
• Credit strategists note that AI capex is heavily debt-funded, leading to concentrated issuance and underperformance in hyperscaler bonds.
• Vanguard’s Cunniffee counsels avoiding broad AI credit and focusing on selective, structure-protected deals.
• Pimco’s Karoui sees opportunities in hyperscaler bonds once the pipeline becomes more predictable and spreads stabilize.
• Private credit stress remains concentrated in software, where high leverage and low coverage ratios clash with higher-for-longer rates.
• NFL raises over $600 million in private placement bonds; Palm Beach commissioners reject a large AI data center project.