Treasury yields fall as tech stock selloff drives investors to havens
US government bond yields reached their lowest levels since early September following a decline in large technology company shares.
US Treasury yields fell across maturities by as much as nine basis points on Thursday, reaching their lowest levels since early September, according to Mint.
The rally in the government bond market occurred as the Nasdaq 100 index dropped 4.75 per cent and the Philadelphia Semiconductor Index fell 8.83 per cent. This movement followed a Democratic sweep in the US midterms.
Anmol Sinha, fixed income investment director at The Capital Group, said the fall in chip stocks suggests there may be a pullback in the pace of capital expenditure spending.
The prospect of a US economic slowdown due to fading enthusiasm for artificial intelligence infrastructure investment has also led to lower expectations for Federal Reserve interest-rate hikes. While traders price in a quarter-point increase for the Dec. 9 vote, some trades targeted no move.
Gregory Faranello, head of macro strategy at South Street Securities Holdings, described the activity as a risk-off move. He stated that they are not chasing duration at current levels but respect the price action relative to risk assets.
Earlier on Thursday, yields had risen due to increasing oil prices and jobless claims data. Cleveland Fed President Beth Hammack and Richmond Fed President Tom Barkin also expressed support for higher rates during public appearances.