US Yields Slide To Three-Week Low As Tech Risk Fuels Haven Bid
Markets were shaken by news of a new AI model from Chinese startup DeepSeek, which fueled concerns that sky-high US tech valuations may come under pressure.
US Treasuries rallied on Monday as investors flocked to safe assets after technology shares drove a slump in equity markets.
The yield on 10-year US bonds fell as much as 10 basis points to 4.52%, the lowest since Jan. 2, while haven currencies including the yen, Swiss franc and US dollar rose.
Markets were shaken by news of a new AI model from Chinese startup DeepSeek, which fueled concerns that sky-high US tech valuations may come under pressure. That sent stocks plunging across the globe.
“Rates and equity correlations have seemed to return with this risk-off move in equities,” said Pooja Kumra, senior UK and European rates strategist at Toronto-Dominion Bank.
The gains in bonds and haven currencies come in what’s likely to be a choppy week for markets with the Federal Reserve setting monetary policy on Wednesday and tariff talks remaining in focus. Investors are also digesting the weekend tussle between President Donald Trump and Colombia, with the latter swiftly agreeing to the return of migrants to avoid hefty levies.
“The incident again shows that tariffs are a negotiating tool, but markets need to price in some premium for the volatility that such announcements will bring,” said Mohit Kumar, chief economist and strategist for Europe at Jefferies International.
European bonds followed US Treasuries higher, sending the German 10-year yield lower by seven basis points to 2.50%. Debt from Italy to France and the UK also gained.
The dollar advanced versus all Group-of-10 peers except the yen and the Swiss franc, which attracted haven flows. The Japanese currency gained 0.8% to 154.71 per dollar, the strongest level in five weeks. Demand for options also picked up, as traders added long-volatility exposure.
