The U.S. bond selloff that began with the war with Iran has pushed the 10-year Treasury yield toward 5%, a level it has rarely sustained for almost two decades. Higher yields can increase borrowing costs for consumers and companies, potentially weighing on stocks, corporate earnings, refinancing, acquisitions and capital spending. Analysts disagree, however, on whether the move primarily reflects stronger demand for capital from an AI-led investment boom or mounting concern about widening fiscal deficits and government debt, which recently passed $40 trillion in the United States. The 10-year yield touched 4.8% on Friday and reached its highest level since October 2023 earlier in the week. Nominal U.S. GDP growth rose from 6.07% year on year in the first quarter to 6.56% in the second, remaining above borrowing costs for now. The average long-term real rate on U.S. inflation-protected securities rose to 2.92% from 2.55% at the end of last year, with TD Securities USA's Gennadiy Goldberg saying the recent increase in long-term Treasury yields was driven predominantly by real rates. Investors are also watching stretched stock valuations, historically tight investment-grade credit spreads and signs that higher financing costs could delay mergers and acquisitions by months. With the S&P 500 near another record, the market's next phase will depend on corporate borrowing costs, the relationship between yields and economic growth, real rates and the durability of AI investment.