US bond yields drop as AI rout sparks hunt for safe havens
TLT•US Treasury yields fell as a selloff in technology stocks over concerns about AI spending drove investors toward safe-haven bonds. The 10-year yield dropped 6 basis points to 4.925% and was on track for a 36-basis-point decline in October, its largest monthly fall since December 2023.
1. Treasury yields fall
The 10-year US Treasury yield fell 6 basis points to 4.925% on Friday, putting it on track for a 36-basis-point decline in October, the largest monthly drop since December 2023. The two-year yield also fell 6 basis points, while the 30-year yield was down 4 basis points.
2. AI spending concerns weigh
Nasdaq futures fell 2% after Amazon and Intel earnings reports raised investor concerns about whether the cost of AI investment would generate sufficient returns. Amazon shares fell 7% in premarket trading after reporting a sharp cash outflow and another increase in spending; Intel dropped 25% after warning it would burn cash this year. Alphabet had suffered a record selloff in the previous session, wiping out $500 billion in value after its results disappointed investors.
3. Rates and recent context
The Treasury rally followed a recent selloff that had taken the 10-year yield to 5.365% in early October, its highest since 2002. Yields fell despite data showing the US economy grew at its fastest pace in a year in the third quarter and personal consumption expenditures inflation ran hot in September. Money markets indicated about a 75% chance of a Federal Reserve rate hike in December, after the central bank held rates at 3.75% to 4.00% on Wednesday.
