US Treasury yields pull back from lows as stocks rally on AI rebound
According to Reuters, the 10-year US Treasury yield slipped to 5.121%, while bets on a Fed rate hike fell sharply over the past week.
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what happened
According to Reuters, longer-dated US Treasury yields fell on Tuesday but retreated well from their earlier lows in choppy trading. US stocks rallied, partly as AI shares rebounded and investors bought the dip.
The 10-year yield dropped 1.5 basis points to 5.121%, after touching 5.073% earlier. The 30-year yield fell 4.2 basis points to 5.431%, while the 2-year rose 3 basis points to 4.791%. According to CME FedWatch, the probability of a Fed hike of at least 25 basis points at next week's meeting stands at 17.2%, down from 22.1% a week earlier. Housing data also weakened: the pending home sales index tumbled 7.3% to 66.0, the lowest level since the series began in 2001.
why it matters
Yields had risen on firm growth and worries that central banks would tighten further, but markets priced in too much tightening, leaving them vulnerable to a reversal. Market-implied 10-year inflation expectations from TIPS remain around 2.4% a year. Treasury auctions of $13 billion in 20-year bonds and $26 billion in 5-year TIPS this week will add supply.
market impact
US bonds and stocks: yields eased as safe-haven demand faded after the AI stock sell-off and buying returned
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instruments
sources
- US yields ease off lows as stocks rally — Reuters, 20 October 2026 at 18:43 UTC
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