US yields dip as AI risk weighed, 20-year auction on deck
TLT•US Treasury yields declined as investors weighed AI-stock risks ahead of a $13 billion 20-year bond auction. The 10-year yield fell 1.5 basis points to 5.102%, while markets priced a 14.9% chance of a 25-basis-point Fed hike next week.
1. Yields move lower
The benchmark 10-year Treasury yield fell 1.5 basis points to 5.102% and was on pace for a second straight daily decline. The 30-year yield slipped 1.2 basis points to 5.413%, while the two-year yield shed 0.9 basis point to 4.778%.
2. Auction and rate outlook
The Treasury was set to auction $13 billion in 20-year bonds on Wednesday and $26 billion in five-year Treasury Inflation-Protected Securities on Thursday. Markets priced a 14.9% chance of a 25-basis-point Fed rate hike at its October 28 announcement, down from 33.2% a week earlier and 57.6% a month earlier.
3. AI stocks and Treasuries
Investors have weighed the impact of higher borrowing costs on AI infrastructure stocks, with concerns at times pressuring equities and increasing demand for Treasuries as a safe haven. The 10-year yield fell 14.6 basis points last week, its biggest weekly decline in eight months, despite hotter-than-expected inflation readings.
