The 10‑year Treasury yield fell to 4.98% in late trading, a 12‑basis‑point drop that lifted the whole curve by as much as 16 basis points, according to the Bloomberg gauge. The fall sent the 5‑ to 30‑year yields to their lowest levels in nearly a month, a move that dovetails with fading expectations for a Fed rate hike next year.
Citigroup’s interest‑rate strategist Michael Chang noted, "It’s encouraging for rates that Treasuries act as a safe‑haven asset even as oil rises.” The rally also pushed Brent crude above $112 a barrel, the first time since May, after attacks on Saudi oil infrastructure heightened supply fears.
AI‑sector sentiment is wobbling; the Philadelphia Semiconductor Index fell 6.3% to its lowest since late July. DBS Bank’s senior rates strategist Eugene Leow warned that "investors may hedge against AI‑related risks by flocking to Treasuries," a sentiment echoed by the German and French bond markets, where French yields spiked to 5.14% in 2023.
Looking ahead, the 5‑year TIPS auction at 1 p.m. New York time is expected to yield its highest level since October 2023, while Fed officials hint that rate hikes may pause if inflation stabilizes. Traders will watch oil volatility and AI‑stock volatility closely as they decide whether to re‑enter the bond market or shift back into equities.