US 10-year Treasury yields surged to 4.82%, the highest since 2023, as inflation worries and heavy government and AI-sector borrowing drive a global bond rout. The spread for triple-C and lower-rated companies widened to 10.53 percentage points from 8.08 a year ago, signaling mounting stress for the most indebted firms. Default actions among low-rated borrowers rose 9% this year to $40.1bn, with recovery rates on defaults falling to 29% versus a 25-year average of 40%, according to JPMorgan.

The cable and satellite sector led defaults, highlighted by Dish DBS’s $9.75bn default in June, the second-largest since the pandemic. John Cocke of Corbin Capital Partners noted broad pessimism in the least creditworthy tail, while John Stopford of Ninety One described the market as "bifurcated" — high-grade bonds expensive, junk bonds "dicey." Henry Song of Diamond Hill warned that companies built in a zero-rate era cannot sustain higher rates long-term. Futures pricing suggests the Federal Reserve may raise rates two or three more times before end-2027, extending pressure on vulnerable borrowers.