US 30-Year Yield Could Hit 6% as AI Investment Drives Productivity Gains

Barclays Capital has warned that the US 30-year Treasury yield could hit 6% if productivity continues to rise, driven by artificial intelligence investment. According to a report from Anshul Pradhan, head of US rates research at Barclays, the current bond market selloff has not fully priced in the possibility of sustained productivity acceleration.

The report argues that investors have yet to reach a consensus on whether the neutral interest rate is temporarily elevated or structurally shifting higher. If AI investment drives a structural improvement in US productivity, the Federal Reserve's terminal policy rate would land significantly above levels implied by the current forward curve, exerting sustained pressure on long-dated Treasury valuations.

The report also outlines two alternative paths: a cooling of the capital expenditure boom and persistently rising yields pushing government interest costs higher and further deteriorating the US fiscal outlook. In these scenarios, Treasury prices could rebound or long-term yields face upward pressure.