FX.co ★ US 10-Year Yield Resumes Decline

The yield on the US 10-year Treasury note retreated to around 5.08% on Thursday, extending its recent decline as a global selloff in technology and AI stocks spurred safe-haven demand for government bonds. The sharp correction in Treasuries that had driven yields to multi-decade highs also eased, with investors moving in to “buy the dip.”

Attention now turns to next week’s Federal Reserve policy meeting, where interest rates are widely expected to be left unchanged. Recent data have reinforced concerns about a cooling US economy, with September housing starts declining and pending home sales dropping to a record low.

Comments from Chair Kevin Warsh last Friday did little to shift expectations for a rate pause. Even so, markets continue to assign some probability to a rate hike in December, reflecting ongoing worries about inflation, particularly from higher energy prices. At the same time, oil prices have surged amid escalating tensions in the Middle East, further intensifying inflation concerns.