Key Takeaways
- • The 10-year U.S. Treasury yield fell more than 18 basis points to 4.965%, its first close below 5% since Sept. 23, according to CNBC.
- • The 2-year Treasury yield dropped more than 17 basis points to 4.65%, while the 30-year yield fell more than 13 basis points to 5.30%.
- • Equities sold off on concerns around the AI trade, including worries about heavy bond issuance by AI-related companies, while oil prices rose sharply with WTI near $100 per barrel and Brent above $111.
- • Analysts described the move as a flight to safety, with ClientFirst Strategy's Mitch Goldberg citing investor fear of AI-related bond supply.
- • The rally in bonds reverses an early-October peak in 10- and 30-year yields, which hit their highest levels in more than two decades.
Summary
Treasury yields fell sharply on Thursday as investors moved into safe-haven assets amid a steep sell-off in equities, according to CNBC. The benchmark 10-year Treasury yield, which sets rates for mortgages, auto loans and credit card debt, dropped more than 18 basis points to 4.965%. It was the first time since Sept. 23 that the yield traded below 5%. The 2-year note, which more closely tracks short-term Federal Reserve policy expectations, fell more than 17 basis points to 4.65%, and the 30-year bond, which often reacts to geopolitical developments, declined more than 13 basis points to 5.30%.
The equity pressure followed comments from Nvidia CEO Jensen Huang, who told CNBC that demand for neoclouds is "off the charts" but that capital is scarce. Mitch Goldberg, president of ClientFirst Strategy, characterized the move as a flight to safety, saying investors are increasingly concerned about the volume of bond issuance by AI-related companies and are seeking instruments they expect to be repaid at maturity.
The bond rally marks a reversal from earlier in October, when the 10-year and 30-year yields reached their highest levels in more than two decades on inflation worries and elevated energy prices. CNBC reported that some investors had viewed yields above 5% as an attractive entry point, particularly as Middle East tensions escalated again.
Geopolitical risk also weighed on markets. Oil rose sharply Thursday, with West Texas Intermediate futures last up more than 2% at above $99 per barrel and Brent crude up more than 2% to above $111. The moves followed a New York Times report, citing unnamed U.S. officials, that the United States and Israel are considering resuming strikes on Iran in a "short but intensive" operation after next month's midterm elections.
The equity pressure followed comments from Nvidia CEO Jensen Huang, who told CNBC that demand for neoclouds is "off the charts" but that capital is scarce. Mitch Goldberg, president of ClientFirst Strategy, characterized the move as a flight to safety, saying investors are increasingly concerned about the volume of bond issuance by AI-related companies and are seeking instruments they expect to be repaid at maturity.
The bond rally marks a reversal from earlier in October, when the 10-year and 30-year yields reached their highest levels in more than two decades on inflation worries and elevated energy prices. CNBC reported that some investors had viewed yields above 5% as an attractive entry point, particularly as Middle East tensions escalated again.
Geopolitical risk also weighed on markets. Oil rose sharply Thursday, with West Texas Intermediate futures last up more than 2% at above $99 per barrel and Brent crude up more than 2% to above $111. The moves followed a New York Times report, citing unnamed U.S. officials, that the United States and Israel are considering resuming strikes on Iran in a "short but intensive" operation after next month's midterm elections.
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