U.S. Treasury yields fall below 5% for first time in a month as safe-haven demand surges

[Financial News] U.S. Treasury prices, which posted record declines in August and September, have begun to stabilize again. Market participants said funds that had been in equities moved into safe-haven assets such as Treasuries amid concerns about AI-related investments. Recent political instability in the Middle East has also boosted demand for safe-haven assets.
According to U.S. business news outlet CNBC, on the 22nd (local time) the yield on the 10-year U.S. Treasury note fell about 0.18 percentage points from the previous session to 4.96%. It was the first time the yield had fallen below 5% since September 23. The one-day decline was the largest since March 10, 2023. Bond yields are determined by discounting the value at maturity using the market yield, so the higher the market yield, the lower the trading price. The yield on the 2-year U.S. Treasury note also fell about 0.166 percentage points to around 4.66% that day. The 30-year yield fell 0.145 percentage points to 5.29%.
CNBC noted that concerns about AI investment have been growing in the U.S. stock market, prompting related funds to flow elsewhere. Earlier, technology stocks plunged in the U.S. market amid projections of massive AI investment spending by Meta Platforms. In addition, Nvidia CEO Jensen Huang said that demand in the cloud market dedicated to AI was explosive but capital was scarce, heightening investors’ concerns about financing risks.
Mitch Goldberg, president of the U.S. financial consulting firm ClientFirst Strategy, described it as “a flight to safety” and said, “Investors are suddenly scared by the amount of bond issuance from AI-related companies.” He explained that investors, worried about AI-related companies’ debt burdens and rising interest rates, are moving into assets they believe will return their principal at maturity.
Larry Holzenthaler, a senior portfolio manager at the U.S. asset management firm Catalyst Funds, said, “For the first time in a long time, U.S. Treasuries are enjoying safe-haven status.” He explained that the weakness in technology stocks, rising risks in the Middle East and higher oil prices had combined to make U.S. Treasuries a relatively safe investment in the short term.
International oil prices surged that day after the possibility was raised that the United States and Israel could attack Iran again. Brent crude futures rose 4% to $113.17 a barrel, while West Texas Intermediate (WTI) gained 2.39% to close at $99.47.
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