Analysts estimate that the neutral interest rate, known as R-star, has risen as the U.S. economy absorbs strong capital spending tied to artificial intelligence and heavy government borrowing. ^[1][6] US long-term Treasury yields have moved back toward their highest level since 2007, with the 30-year yield specifically under pressure. ^[2] Chip Hughey, managing director of fixed income at Truist Wealth in Richmond, Virginia, stated that heavy investment around the AI build-out and higher government debt levels are likely culprits for the higher R-star. ^[3] The U.S. national debt hit $40 trillion, creating an unusual combination of huge public sector demand for capital alongside a surge in private sector investment driven by AI. ^[4] Zachary Griffiths, head of investment grade and macro strategy at CreditSights in Charlotte, North Carolina, said that a higher R-star is pushing rates across the curve higher and implies the Fed will need to settle at a higher policy rate. ^[5] US Treasury Secretary Scott Bessent doubled the size of long-term Treasury buybacks last month in an attempt to stabilize the market. ^[7]