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Treasuries rose Tuesday as trading resumed after a long weekend and global stock losses boosted haven demand. The 10-year US yield fell as much as 5 basis points to about 5.19%, while Asia’s stock benchmark dropped more than 2% intraday to a two-month low and Nasdaq 100 futures declined 0.8%. Investors grew cautious about AI stocks amid competition, valuations and spending concerns. The 10-year yield had reached 5.36% last week, its highest since 2002, amid fiscal-deficit worries and expectations of further Federal Reserve tightening. TD Securities strategist Prashant Newnaha said Asian equity losses supported bonds, with no clear data catalyst for the rally.
Prime brokerage revenues are forecast to grow 38 per cent to $47.9 billion this year, according to Coalition Greenwich, as banks expand lending to hedge funds and trading firms. Financing withdrawal notice periods for coveted clients now reach six months, while rising bank exposure concerns regulators. JPMorgan Asset Management aims to double European assets to $2 trillion within five years, prioritising active ETFs, alternatives and wealth-manager partnerships. A US Treasury sell-off has pushed borrowing costs for the lowest-rated companies to 17 per cent this month. Bank of America cut its monthly forecast for dollar-denominated investment-grade corporate issuance from about $160 billion to $110 billion.
Major economies are resisting the Middle East energy shock as AI spending supports growth, according to the Brookings-FT Tiger indexes. However, persistent inflation and rising public debt pose risks ahead of this week’s IMF and World Bank meetings in Bangkok. Oil exceeded $100 a barrel after US-led attacks on Iran in February, though reserve drawdowns cushioned the impact. A global government-bond sell-off has driven borrowing costs to multi-decade highs as central banks abandoned planned rate cuts for increases. Cornell and Brookings economist Eswar Prasad said shrinking policy flexibility makes productivity-enhancing structural reforms essential for fiscal sustainability.
Mortgage rates rose about one percentage point in just over a month to around 7.5%, a three-year high, as global bond yields surged, discouraging buyers. Economists cited inflation concerns following the US attack on Iran on Feb. 28, resilient economic growth, AI-related borrowing, and government debt exceeding $40 trillion as factors pushing yields higher. Expectations of Fed tightening also influence rates: inflation stands at 3.4%, and CME FedWatch shows an 86% probability of at least one 25-basis-point hike by year-end. Mortgage News Daily reported a 7.48% average Friday, a two-week low, but economists said 8% mortgages remain possible.
The Wall Street Journal’s Oct. 2–7 survey of 71 analysts projects sustained higher U.S. Treasury yields, with the 10-year yield reaching 5.1% at end-2026, versus July’s 4.4% forecast, and 4.78% at end-2027. Economists cite stronger growth, inflationary pressures and fiscal concerns, despite little change in inflation forecasts. Higher yields raise borrowing costs and federal interest expenses. Respondents expect 2.4% GDP growth in 2026 and put the 12-month recession probability at 24%. Northern Trust’s Carl Tannenbaum cites debt concerns and AI investment, while Georgia State University’s Rajeev Dhawan says labor-market weakness could prompt Fed rate cuts and lower yields.
US Treasury Secretary Scott Bessent is likely to reduce the auction sizes for long-dated government bonds — and could even cancel sales of 20-year debt altogether, according to Citigroup Inc.
The bank’s base case is a $3 billion reduction per auction for both 20- and 30-year bonds, which would be funded by additional T-bill issuance, according to head of US rates strategy Jason Williams. That would be announced at the Treasury Department’s next quarterly refunding announcement on Nov. 4.
The Citi strategist recommended in a late Friday note that clients position for 20-year bonds to outperform 10-year notes on the prospect of a “reduction, or perhaps cancellation, of the 20-year bond.”
Read:US Treasury’s Dealer Survey Seen as ‘Risk Event’ for Bond Market
A first hint at such a change could come in a survey of dealers scheduled for next Friday. That questionnaire stands to offer a “bullish catalyst” for the trade, according to Williams, if the department asks major financial institutions whether demand for long-end debt is being “partly cannibalized” by high-quality hyperscaler issuance.
“While we do not think such IG supply has impacted the overall level of rates, we do think pension funds could be leaning into long-end IG bonds more than they typically have,” he wrote.
Across Wall Street, debate has been growing over what Bessent might do to help reign in US government bond yields near multi-decade highs. Earlier this week, strategists at BNP Paribas SA said they were skeptical that such a move would be effective at lowering government borrowing costs.
Read: Wall Street Sees Bessent Entering ‘New World’ For Debt
Asset managers cut bullish ultra-long Treasury futures positions by about $27 million per basis point of risk in the two weeks ending Oct. 6, equivalent to roughly $38 billion in current 10-year notes, according to CFTC data. Futures prices fell as 30-year yields reached a 24-year high of 5.68%. The data indicated forced selling linked to “switch-risk,” as cheapest-to-deliver securities shifted toward longer maturities, extending portfolio duration. Ultra-long futures open interest declined for seven consecutive sessions by almost $20 million per basis point of risk; rising yields also indicated an unwinding of long positions.
Treasuries fell Friday as elevated energy costs fueled inflation concerns and expectations of further Federal Reserve rate increases. Two-year yields rose four basis points to 4.79%, while 10-year yields reached 5.24%. Inflation worries linked to the Iran war and widening deficits drove selling, pushing 30-year yields earlier this week to their highest since 2002. Strong auction demand lowered yields Thursday. Brent traded around $104 a barrel. Wednesday’s US inflation report could provide clues on Fed policy. After last month’s first hike since 2023, traders price a 20% chance of an October increase and fully price a December hike. Marc Chandler said firm CPI could raise policy expectations and long-term rates.
Pimco’s chief investment officer Dan Ivascyn warned that US 10-year Treasury yields could rise from 5.29% to 6%, their highest since 2000, as inflation, high oil prices and public-debt concerns unsettle markets. Forced selling by leveraged investors could accelerate the rise. He said yields of 5.5% or more could weaken stocks and corporate bonds, while higher yields could gradually strain private markets, including commercial real estate. US 30-year mortgage rates averaged 7.4% on October 8. Ivascyn said investors seeking to secure high returns would eventually buy more Treasuries, limiting further yield increases, and highlighted opportunities in overseas debt markets.
US Treasury yields have surged since the war with Iran began in February: the 10-year yield rose about 135 basis points to 5.23%, while the 30-year reached 5.614%. Four indicators suggest selling could intensify: rising demand for options protection, AI-related corporate borrowing prompting Treasury hedging or sales, increased mortgage hedging, and a steeper 10-year/30-year yield curve. Goldman Sachs predicts hyperscalers could issue $420 billion in debt next year. The 10s-30s spread widened to about 37 basis points this week, suggesting investors want greater compensation for holding longer-term debt. However, buyers may step in to secure elevated yields.
The term premium, investors’ extra compensation for holding long-term Treasuries, has surged, driving a bond selloff that pushed US Treasury yields to a 24-year high. Since mid-September, the New York Fed’s model shows it rose about 40 basis points to 0.98%, its highest since 2014, while 10-year yields increased nearly 30 basis points. Analysts cite possible contributors including fiscal and geopolitical uncertainty, growing debt supply, French bond turmoil and hedging activity, but no clear catalyst. A sustained increase could keep borrowing costs elevated. Dallas Fed President Lorie Logan said it may slow the economy and reduce the need for rate hikes.
The 30-year Treasury auction on Thursday was not as strong as Wednesday's 10-year sale, putting yield at their highest level in decades, said Tony Miano, global investment strategy analyst at Wells Fargo Investment Institute.
Thursday's auction stopped at a high yield of 5.618%, up 31 basis points from the 5.308% result at the September auction, he noted.
Both the 10-year and 30-year sales show demand isn't broken, but it is concentrated at the front and belly of the curve, Miano said.
"The long end is where investors are demanding the most compensation, consistent with a term-premium/duration-risk story rather than an outright 'no buyers' story," he added. "Net takeaway: today's 30-year result is a curve-steepening signal — long-duration paper absorbing the brunt of the repricing."
📣 "We are having productive discussions with the Islamic Republic of Iran. I want to make it clear to everybody that, while Iran is in very bad condition, both Economically and Militarily, and while the Blockade will remain in full force and effect, with Oil flowing in Record Numbers of Barrels through the Hormuz Strait (22 Million Barrels, last night alone, with not one barrel coming from, or going to, Iran!), we will not be attacking Iran at any time prior to the Midterm Elections to be held in the United States on November 3rd. IRAN WILL NOT HAVE A NUCLEAR WEAPON!"
—President Trump on Truth Social shortly after noon ET. The post pushed oil prices and bond yields lower in afternoon trading.
US Treasuries rallied Thursday after strong demand at a 30-year bond auction, which analysts cited as a major driver. The auction yield was 5.618%, below expectations, with a bid-to-cover ratio of 2.54 versus a six-auction average of 2.41. In afternoon trading, 10-year yields fell 5 basis points to 5.227%, while 30-year yields dropped 5.9 basis points to 5.602%. Fed Governor Christopher Waller said further rate increases would likely be needed to bring inflation to 2%, while allowing flexibility on pace. Oil continued fueling inflation concerns: Brent settled up 3.7% at $103.92 per barrel, and US crude rose 3.4% to $91.17.
Longer-dated US Treasuries rose Thursday ahead of a $22 billion 30-year bond auction, with 30-year yields falling one basis point to 5.66%, near their highest since 2002. Wednesday’s $39 billion 10-year auction attracted strong demand, with non-dealer investors buying a record 97.5%. Renewed Middle East escalation pushed oil above $105 a barrel, reviving inflation concerns; two-year yields rose almost five basis points to 4.81%. Traders priced roughly a 20% chance of a Federal Reserve rate increase this month and fully priced one by year-end. Thursday’s auction will precede a Treasury buyback of up to $6 billion in bonds maturing in 20–30 years.