Treasury Yields Tumble, but Long-Term Pressure Lingers as AI Selloff Reprices Assets
Summary
- Bitunix said that despite the sharp drop in U.S. Treasury yields, a sustained long-term decline in rates may be difficult because of U.S. federal government debt and the burden of Treasury issuance.
- Bitunix said a global asset repricing is underway amid a technology-stock selloff, doubts about the profitability of AI investment, and a reduction in exposure to risk assets.
- Bitunix said interest rates and risk-asset prices could both come under pressure if rising oil prices, inflation pressure, and concern over a slowdown in AI investment converge.
Forecast Trend Report by Period
A sharp drop in U.S. Treasury yields has boosted demand for safe-haven assets, but the decline may be difficult to sustain over the longer term because of the heavy burden of government debt issuance.
BlockBeats, a media outlet focused on digital assets, reported on Oct. 23 that analysts at Bitunix see a repricing underway across global asset markets alongside the recent selloff in technology stocks.
The yield on the 10-year U.S. Treasury fell 19.3 basis points in a single day to 4.952%, the biggest one-day drop since March 2023. The two-year yield also declined 18.8 basis points.
Bitunix said investors cut exposure to risk assets as Middle East tensions, concerns over France's fiscal outlook and doubts about the profitability of artificial intelligence investment all intensified at once. Short-covering of existing bearish Treasury positions may also have amplified the drop in yields, though the firm said it was too early to conclude that recession fears are being fully priced in.
Supply pressure also remains in the long-dated Treasury market. U.S. federal government debt has surpassed $40 trillion, and interest costs for fiscal 2026 are estimated at about $1.36 trillion. A recent 20-year Treasury auction cleared at 5.469%, the highest level since 1986.
Gold briefly fell below $4,000 an ounce. That weakness, despite a softer dollar and lower Treasury yields, may indicate that investors also unwound precious-metals positions to raise liquidity during the technology-stock selloff.
The Japanese yen was also flagged as a key variable. Japan's core consumer inflation rate for September stood at 2.1%, while the index excluding fresh food and energy rose 2.4%, reinforcing expectations for a December rate hike by the Bank of Japan.
Bitunix said the key question going forward is whether the latest buying in U.S. Treasuries will prove to be a short-term flight to safety and short-covering, or whether markets are genuinely starting to mark down growth expectations. If rising oil prices, inflation pressure and concerns about slowing AI investment persist together, both interest rates and risk-asset prices could face pressure.
