US Treasuries rally as AI stock selloff pushes investors into safe bonds

what happened

According to Stocktwits, U.S. government bonds gained sharply in the week ending October 23. A steep drop in artificial intelligence technology shares and mounting worries about corporate debt drove investors toward safer fixed-income assets. The concern centers on hundreds of billions of dollars in company borrowing raised to fund AI computing infrastructure. Analysts at Gartner warned that operators of AI data centers could take write-downs of as much as $4 trillion by 2032 if hyperscaler revenue fails to cover heavy capital spending.

The benchmark 10-year yield moved back below the 5.00% threshold for the first time in four weeks, with a weekly close of 5.00% after an 8 basis point decline. The 30-year yield fell 10 basis points to 5.32%, while the 2-year yield eased 2 basis points to 4.69%. The gap between 10-year and 2-year yields narrowed to 0.31% from 0.37%.

The iShares 20+ Year Treasury ETF (TLT) rose 1.6% over the week, and the iShares 1-3 Year Treasury ETF (SHY) gained about 0.2%. The U.S. Dollar Index ended the week at 101.75, down 0.2%. Stocktwits noted that markets still price in one more rate hike in December.

why it matters

Falling yields usually mean rising bond prices, so the move looks more like money leaving riskier assets than a change in rate expectations. Wider credit spreads at neocloud providers such as CoreWeave (CRWV), whose shares lost about 12% this week, point to growing strain around AI-related debt. German 10-year Bund yields also declined, reflecting broad demand for safe-haven assets.

market impact

US Treasuries and the dollar: safe-haven demand supports bonds while AI-linked debt risks weigh on tech stocks

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