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Capital Economics believes the U.S. Treasury selloff stems mainly from changes in near-term rate expectations. The 10-year Treasury yield is now close to its June 2007 high, and economist James Reilly notes that the move reflects rising oil prices and a strong U.S. economy more than AI-related debt issuance or fiscal concerns. Reilly expects the 10-year Treasury yield to "fall sharply to 4.25%" by the end of 2027 as the Fed tightens less than investors currently expect. He argues that while AI-related debt issuance will continue to put upward pressure on yields, its impact will be smaller than media reports suggest and will be offset by shifts in monetary policy expectations. As for fiscal concerns, he adds that no substantive fiscal news has emerged recently that would be enough to trigger a sharp spike in yields.