US bond market down: Why are 10-year, 30-year, 2-year treasury yield notes are falling? Check latest predictions

US bond yield on the 10-year Treasury tumbled to 4.97 per cent from 5.13 per cent late Wednesday and from more than 5.30 per cent earlier this month. The yield on the benchmark US 10-year Treasury note fell 19.3 basis points to 4.953 per cent and was on track for its biggest daily drop since March 10, 2023. The yield had risen to 5.3645 per cent on October 7, its highest since April 2002. The yield on the 30-year bond tumbled 15 bps to 5.287 per cent and was on pace for its biggest daily drop since August 2024. The 2-year US Treasury yield, which typically moves in step with interest rate expectations for the Fed, stumbled 18.5 bps to 4.638 per cent, on pace for its biggest decline since August 2025. These are major moves for the bond market.

Yields have been generally climbing there because of worries about the government’s big debt load and strained budget. Violent protests across France have raised pressure on the government to increase spending, which could add further to its debt. Worries about big government debt are weighing on almost every developed economy in the world, including the United States. Such concerns, along with high inflation, signals of a still-strong U.S. economy and other factors, have pushed yields in the U.S. bond market recently to their highest levels in decades.

Why are US Bond Yields Down?


But U.S. yields nevertheless fell sharply Thursday in a signal that investors were buying U.S. government bonds in search of something safer to own as AI stocks tumbled. Thursday’s drop in yields came even as another report suggested the U.S. economy may be doing better than economists expected. It said fewer U.S. workers applied for unemployment benefits last week, which could signal that layoffs remain low across the country.

That solid economy has helped U.S. companies broadly to make bigger profits, which is what propelled the U.S. stock market to a record high earlier this month despite the many worries tugging at it. Two out of every three stocks within the S&P 500 rose Thursday, only to get drowned out by the drops for more influential tech stocks.

Yields have dropped in recent days, as concerns about a slowdown in AI spending and its impact on economic growth have overshadowed economic data, which showed persistent inflation pressures.

Investors had already priced in inflation and the prospect of Federal Reserve rate increases, but changes in risk assets and financial conditions are now fueling the bid for Treasuries, said Thomas Urano, co-chief investment officer at Sage Advisory in Austin, Texas.

An auction of $26 billion in 5-year US Treasury Inflation-Protected Securities (TIPS) was seen as solid by analysts at BMO Capital Markets, with non-dealer bidding of 94.5 per cent above the 90.8 per cent average for the past six auctions.

On the economic front, the Labor Department said weekly initial jobless claims fell 6,000 to a seasonally adjusted 194,000, below the 200,000 estimate of economists polled by Reuters, indicating the labor market may be picking up steam after a sluggish September.

The break-even rate on 5-year TIPS was last at 2.381 per cent after closing at 2.413 per cent on Wednesday, its highest close since September 15. The 10-year TIPS break-even rate was last at 2.333 per cent, indicating the market sees inflation averaging about 2.3 per cent a year for the next decade.