U.S. yields dip as AI risk is weighed, but move off lows after auction
TLT•U.S. Treasury yields edged lower as investors weighed interest rates’ effects on AI stocks, then moved off session lows after a $13 billion 20-year bond auction. The 10-year yield fell 0.6 basis point to 5.111%, while markets priced a 14.9% chance of a 25-basis-point Fed hike next week.
1. Yields edge lower
The 10-year Treasury yield fell 0.6 basis point to 5.111% on Wednesday and was on track for a second straight daily decline, after touching 5.081%. The 30-year yield slipped 1.3 basis points to 5.412%, while the two-year yield edged up 0.2 basis point to 4.789%.
2. Auction lifts yields
Yields moved off their lows after a $13 billion 20-year bond auction. Analysts viewed the sale as mixed: its 5.469% high yield was above the bidding deadline, while demand was 2.73 times the amount offered, above average. Treasury is scheduled to auction $26 billion in five-year inflation-protected securities on Thursday.
3. Fed hike odds fall
Markets priced a 14.9% chance of a 25-basis-point Federal Reserve rate increase at its October 28 announcement, down from 33.2% a week earlier and 57.6% a month earlier. The decline in yields came despite hotter-than-expected inflation readings. The 10-year yield fell 14.6 basis points last week, its biggest weekly drop in eight months, as concerns about AI-related stocks weighed on equities and increased demand for safer assets.
