U.S. Treasury Yields Fall as Tech Selloff Sparks Safe-Haven Demand

U.S. Treasury yields dropped sharply on Thursday as investors sought safer assets amid a global technology stock selloff, reversing gains triggered by stronger-than-expected U.S. inflation data. Despite renewed concerns about rising interest rates, markets continued to expect the Federal Reserve to leave borrowing costs unchanged at its October meeting.

The benchmark 10-year U.S. Treasury yield declined 1.6% to 5.104%, retreating from Wednesday evening's high of 5.333%. The 20-year yield fell 1.3% to 5.503%, while the 30-year yield dropped 1.3% to 5.455%. Meanwhile, the five-year Treasury yield slipped 1.7% to 4.908%.

The decline followed Wednesday's rally in bond yields after September's consumer price index (CPI) report showed inflation running slightly above economists' expectations. The stronger reading renewed speculation that the Federal Reserve could raise interest rates before the end of 2026.

According to CME FedWatch data, traders assigned a 70.6% probability to a 25-basis-point interest rate increase in December. However, expectations for an October pause remained largely unchanged, as the inflation figures exceeded forecasts by only a narrow margin.

Meanwhile, growing uncertainty surrounding technology and artificial intelligence stocks drove investors toward traditional safe-haven assets, including U.S. government bonds and gold.

The widespread selloff reflected concerns that higher borrowing costs could weaken future earnings prospects for major AI and technology companies. Several businesses involved in the artificial intelligence investment boom rely heavily on debt financing, making them particularly vulnerable to rising interest rates.

Technology shares suffered significant losses as investors reassessed valuations and financing risks. The Nasdaq Composite fell nearly 1.9% on Wednesday, extending pressure across global equity markets.

Selling intensified in Asia on Thursday, with South Korea's KOSPI plunging approximately 8% and triggering a lower circuit breaker as semiconductor and technology stocks came under heavy pressure.

The sharp reversal in Treasury yields highlights the competing forces shaping financial markets. While persistent U.S. inflation supports expectations of tighter monetary policy, escalating stock market volatility is boosting demand for government debt.

Investors will continue monitoring Federal Reserve policy signals, inflation developments, and global equity market movements for clues about the direction of U.S. Treasury yields.