Key Takeaways
- • The 10-year U.S. Treasury yield fell more than 20 basis points to 4.945%, its first close below 5% since Sept. 23, according to CNBC.
- • The 2-year yield dropped 20 basis points to 4.629%, while the 30-year yield fell nearly 15 basis points to 5.293%.
- • Treasuries rallied as investors sought safety amid a steep stock sell-off tied to AI-sector concerns and surging oil prices.
- • WTI crude rose nearly 3% toward $100 a barrel and Brent jumped more than 4% above $113 after reports of possible renewed U.S. and Israeli strikes on Iran.
- • The move reverses an earlier-month peak in 10- and 30-year yields, which had reached their highest levels in more than two decades on inflation and energy concerns.
Summary
U.S. Treasury yields fell sharply on Thursday as investors moved into safe-haven assets amid a steep sell-off in equities. The benchmark 10-year yield, which prices mortgages, auto loans and credit card debt, slid more than 20 basis points to 4.945%, its first move below 5% since Sept. 23. The 2-year note, which closely tracks short-term Federal Reserve policy, tumbled 20 basis points to 4.629%, and the 30-year bond, the most sensitive to geopolitical developments, fell nearly 15 basis points to 5.293%, according to CNBC.
Market participants attributed the move to multiple pressures. Mitch Goldberg, president of ClientFirst Strategy, described the rally as "a flight to safety," citing investor concern over the volume of bond issuance by AI-related companies. Larry Holzenthaler, senior portfolio manager for fixed income at Catalyst Funds, said Treasuries were "enjoying haven status" again, pointing to weakness in technology, escalating Middle East risk and higher oil prices. The bond rebound came as questions persisted about the billions being spent on AI infrastructure. Nvidia CEO Jensen Huang told CNBC that demand for neoclouds was "off the charts" but that capital was scarce.
Geopolitical tensions added to risk-off sentiment. WTI futures rose nearly 3% toward $100 a barrel, while Brent crude gained more than 4% to above $113. The moves followed a New York Times report, citing unnamed U.S. officials, that the U.S. and Israel were considering resuming strikes on Iran in a "short but intensive" operation after the Nov. 3 midterm elections.
The rally reverses a sharp move earlier in the month, when 10- and 30-year yields reached their highest levels in more than two decades amid inflation and energy-price concerns. Above 5%, yields began to look attractive again, according to the report, offering compensation even for inflation risk above 3%. Gregory Faranello, head of U.S. macro strategy at South Street Securities, said the consumer was being squeezed and that sustained high energy prices could force the Federal Reserve to take further action, which he said would be negative for bonds.
Market participants attributed the move to multiple pressures. Mitch Goldberg, president of ClientFirst Strategy, described the rally as "a flight to safety," citing investor concern over the volume of bond issuance by AI-related companies. Larry Holzenthaler, senior portfolio manager for fixed income at Catalyst Funds, said Treasuries were "enjoying haven status" again, pointing to weakness in technology, escalating Middle East risk and higher oil prices. The bond rebound came as questions persisted about the billions being spent on AI infrastructure. Nvidia CEO Jensen Huang told CNBC that demand for neoclouds was "off the charts" but that capital was scarce.
Geopolitical tensions added to risk-off sentiment. WTI futures rose nearly 3% toward $100 a barrel, while Brent crude gained more than 4% to above $113. The moves followed a New York Times report, citing unnamed U.S. officials, that the U.S. and Israel were considering resuming strikes on Iran in a "short but intensive" operation after the Nov. 3 midterm elections.
The rally reverses a sharp move earlier in the month, when 10- and 30-year yields reached their highest levels in more than two decades amid inflation and energy-price concerns. Above 5%, yields began to look attractive again, according to the report, offering compensation even for inflation risk above 3%. Gregory Faranello, head of U.S. macro strategy at South Street Securities, said the consumer was being squeezed and that sustained high energy prices could force the Federal Reserve to take further action, which he said would be negative for bonds.
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