US 10-year Treasury yield drops below 5% for first time in about a month

The yield on the benchmark 10-year US Treasury note fell below 5 percent for the first time in about a month on Wednesday (local time), as a sell-off in technology shares over concerns about the profitability of AI investment combined with rising geopolitical tensions in the Middle East drove investors into the safety of US government bonds.

The 10-year yield stood at 4.952 percent as of 3 p.m. that day, down 19.3 basis points from the previous session. That marked its lowest level since Sept. 17, and the largest single-day decline since March 10, 2023 — a span of 3 years and 7 months.

Earlier, the 10-year yield had climbed as high as 5.3645 percent on Oct. 7, its highest level since April 2002.

Yields across other maturities also fell. The 30-year Treasury yield, which serves as a reference rate for US mortgages and other long-term lending, dropped 15.1 basis points to 5.286 percent.

The policy-sensitive 2-year yield fell 18.8 basis points to 4.635 percent. The single-day decline in the 30-year yield was the steepest since Aug. 2, 2024, while the 2-year yield posted its largest one-day drop since Aug. 1, 2025.

Bond yields move inversely to prices, so the decline in Treasury yields reflects a rise in bond prices.

The surge in demand for Treasuries was driven by growing market wariness over the expansion of AI infrastructure investment and aggressive corporate bond issuance, which fueled a broader shift away from risk assets. Reports that the United States and Israel were considering resuming military operations against Iran after the November US midterm elections added to the flight-to-safety bid, heightening regional tensions and reinforcing Treasuries' appeal as a safe haven.

Despite a string of indicators pointing to persistent inflationary pressure, markets are assigning a low probability to the Federal Reserve raising its benchmark interest rate at next week's Federal Open Market Committee (FOMC) meeting.

According to CME FedWatch, federal funds rate futures put the odds of an October rate hike at 7.2 percent that day — sharply lower than 27.7 percent a week earlier and 55.4 percent a month ago.

Even as tightening concerns tied to inflation linger, risk-asset volatility and safe-haven demand appear to be the dominant forces shaping the Treasury market.

Thomas Urano, co-chief investment officer at asset manager Sage Advisory, said the tug-of-war between energy and inflation concerns on one side and safe-haven demand for Treasuries on the other had been ongoing, but that "as of last week, the 'flight to safety' is winning in the Treasury market right now."