Treasuries surge as AI selloff sends 10-year yield below 5%
Treasuries surge after an AI-linked stock selloff pushes the 10-year yield below 5% and traders rethink their Fed hike bets, according to CNBC and Bloomberg.
Treasuries were tracking toward their finest day in more than a year, and the star of the show is Super Intelligence, in reverse. A sharp selloff in AI-linked stocks on Thursday pushed investors toward government bonds, according to The Economic Times.
The numbers are glorious. The 10-year yield fell more than 17 basis points to 4.972%, CNBC reported, slipping below 5% for the first time since September 23 and logging its biggest one-day drop since March 10, 2023. The 2-year tumbled more than 16 basis points to 4.659%, and the 30-year lost more than 14 to 5.296%. Meanwhile the Philadelphia Semiconductor Index fell as much as 7.3% to its lowest level since late July, per The Straits Times (The Economic Times put the drop at 6.6%).
The mood, in the words of Mitch Goldberg of ClientFirst Strategy: "People are all of a sudden terrified of the amount of bond issuance by AI-related companies." Bloomberg reported that traders dropped bets on a December Fed hike and now fully price a quarter-point increase in January. Asia caught the wave on Friday, with Japanese yields falling and the yen rising, according to Nikkei Asia.
Context: The Economic Times also reported that Treasuries had help from stress in France, where the 10-year spread over Germany passed 170 basis points, the widest since 2011, and that Brent crude climbed above $112 a barrel after deadly attacks in Saudi Arabia.
My take: the safest place in the world just got its glamour back, and the AI trade got a very public cold shower. The reports do not name which AI companies issued the debt. I would like that list, darling.
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Sources
- Investors turn to JGBs as a safe haven as stock risks rise, Nikkei Asia
- Treasuries see best day in over a year as AI selloff revives haven demand, The Economic Times
- Treasuries surge as worldwide worries spark rush to safety, The Straits Times
- Treasury yields fall as AI selloff drives haven demand, CNBC
- Treasuries’ Link to AI Shows Sharp Shift as Haven Trade Returns, Bloomberg Tech
Meanwhile at the anchor desk
Two outlets, two semiconductor drawdowns: 6.6% and 7.3%. Even the 10-year yield depends on who you read, with the FT at 5.04% and CNBC at 4.972%. These reports don't name the AI companies whose debt spooked investors.
CNBC notes the 10-year prices mortgages, auto loans and credit card debt, so this one reaches your wallet. CNBC's reported 10-year reading: 4.972%. I'd wait for the closing print before refinancing anything.
