US Treasuries Regain Safe-Haven Status as 10-Year Yield Falls 17 Basis Points

Ten-Year Yield Drops 17 Basis Points

US Treasuries staged an abrupt comeback last week, reclaiming the safe-haven role they had largely surrendered through months of sticky inflation and heavy supply. The trigger sat on the other side of the trade. The Nasdaq 100 lost 5.5% over the week as doubts about AI valuations spread, and the 10-year Treasury yield dropped 17 basis points in the same stretch, a rally in bond prices. Stocks and yields had not fallen that steeply in tandem since the US tariff shock of April last year, when trade escalation roiled every major asset class at once.

The week breaks this year's pattern of simultaneous weakness, in which equities and government bonds sold off together. Money cleared out of technology names has begun rotating into long-dated Treasuries instead. Two forces carried the bond bid. The first is fundamental doubt inside the AI ecosystem: signs of slowing revenue growth at Anthropic, the large language model developer, and a slump in the distribution bonds of CoreWeave, an AI infrastructure provider, acted as the market's risk signal. The second is positioning. Speculative hedge funds had crowded into bets against Treasuries, and the price reversal forced them to unwind shorts in size, adding momentum to the move.

Supply dynamics helped as well. US investment-grade companies have issued about $1.7 trillion of bonds this year, 29% more than in the same period of 2025, much of it financing AI data-center construction. As default premiums on AI-linked credit widened and appetite for new deals thinned, the issuance overhang that had weighed on the Treasury market eased, and institutional demand concentrated in federal government paper.

Fed Odds, Oil and the Strategist Split

Above-forecast consumer inflation keeps the safe-haven thesis on probation. Last week's CPI print briefly pushed market-implied odds of a Federal Reserve rate hike in October to about 50%; the deepening technology sell-off pulled them back down, but pricing still allows one further increase this year and another in 2027. Oil is the second hazard. Crude has surged on the conflict around Iran, and on October 16 rising energy costs dragged US stocks and bonds lower at the same time, a live demonstration of the inflation channel that competes with the AI slowdown narrative.

The strategist camp splits on what comes next. Alfonso Borghes, fixed-income strategist at Julius Baer, argues that an AI-led economic downturn would operate like a classic demand shock and pull inflation lower, restoring medium-dated Treasuries as an effective portfolio hedge. John Briggs, who runs North America US rates strategy at Natixis, notes that cheaper AI-linked corporate debt would cool demand for new issuance and relieve the supply pressure on long-dated government bonds. Stephen Barrow, Standard Bank's head of G10 strategy, is more cautious and views the recent bounce as possibly temporary, with inflation risk and structural flows favoring equities still in place. Masahiko Loo, senior bond strategist at State Street Global Advisors, leans constructive, saying a sharper risk-off phase would make Treasuries a valid defensive asset again.

For crypto, the sources draw the connection directly. Bitcoin has tracked Nasdaq technology stocks with a high correlation, so a rotation into government bonds tends to translate into selling pressure for the asset. The same reporting flags possible net outflows through the spot ETF wrappers if traditional institutions keep trimming risk. The asset's path therefore depends on how deep the technology correction runs, what is driving yields lower, and the flow through the spot ETF channel.

What Would Reverse the Bond Rally

Our reading is that the 17 basis-point fall is more than a mechanical squeeze: the crowded short base and the cooling AI issuance pipeline point in the same direction. The gate is still the inflation data, and the Federal Reserve's October decision is the nearest scheduled test; the next CPI reading would change the picture fastest. For risk assets the practical consequence is that Treasuries are competing again for the defensive allocation, which caps appetite at the margin. Bitcoin, the instrument most coupled to the Nasdaq complex in this episode, carries the heaviest repricing weight until the rate path or the next inflation print resolves the ambiguity.