EconomyGlobal markets
US 10-year yield drops below 5% in its biggest one-day fall since 2023
Investors fled technology shares for the safety of Treasuries on Thursday, pulling the benchmark yield down about 19 basis points even as oil climbed.
Key points
- The 10-year Treasury yield fell about 19 basis points to roughly 4.95%.
- It was the largest one-day drop since March 2023, during the US regional bank crisis.
- The yield closed below 5% for the first time since 22 September.
US government bond prices surged on Thursday, pushing the 10-year Treasury yield back below 5% in its sharpest one-day fall in more than three years as investors dumped technology shares and looked for safety.
The yield on the benchmark 10-year note fell about 19 basis points to roughly 4.95%. That was its biggest single-day decline since March 2023, when the collapse of several regional lenders shook the US banking system, and its first close below 5% since 22 September. Yields move inversely to prices.
Shorter and longer bonds rallied too. During the day the two-year yield fell to about 4.69% and the 30-year to 5.32%.
Out of tech, into bonds
The move came as worries over the cost of the artificial intelligence boom returned. The Nasdaq fell 2.6% and a gauge of chipmakers dropped 6.7% after Meta Platforms raised its spending forecast, and money that left technology shares flowed into bonds as well as defensive and financial stocks.
The fall in yields came despite a firm labour market and dearer oil. Weekly jobless claims fell to 194,000, the lowest in three months, and Brent crude rose above 10 a barrel. Market measures of expected inflation barely moved, suggesting much of this year’s rise in yields has come from higher real rates rather than inflation fears.
Investors were also watching an auction of five-year inflation-protected securities, seen as a test of confidence in the Federal Reserve under its chair, Kevin Warsh.
Why it matters for India
Lower US yields usually ease pressure on emerging market currencies such as the rupee by making dollar assets less attractive. On Thursday that effect was swamped by oil: the rupee fell 44 paise to 94.82.