Tech stock selloff sparks safe-haven demand, US Treasuries rally alongside global bonds

on Friday during the Asian session, US Treasury gains accelerated as investors fled selling pressure in US tech stocks for safe-haven US government bonds. Yields across maturities fell at least 3 basis points, extending declines from the New York session. Bonds in Australia, Japan, and New Zealand moved in tandem, with benchmark 10-year government bond yields each dropping more than 5 basis points. Risk sentiment cooled further amid disappointing earnings from tech giants such as Alphabet, fuelling doubts over the sustainability of the AI trade. The benchmark 10-year US Treasury yield has fallen nearly 40 basis points so far in October, poised to log its first monthly decline since February.

Kenneth Crompton, Sydney-based head of interest rate strategy at National Australia Bank, said bonds rallied early today and that risk aversion is once again driving capital inflows following this week's tech earnings. Andrew Tesheider, senior interest rate strategist at Nomura Holdings in Sydney, added that persistent market tension over mega-cap tech valuations, alongside Alphabet's lacklustre results, is pushing some safe-haven flows into debt markets. The rally could persist, as Waller's remarks at the post-meeting press conference were viewed as not particularly hawkish, and these AI-related concerns seem likely to linger. (Jin10)