Treasury Yield Plunges in Biggest One-Day Drop Since 2023

The 10-year Treasury yield fell below 5% on Oct. 22 for the first time in a month, as a global bond selloff gave way to a flight for safety. The benchmark Treasury yield declined 0.193 percentage point to 4.952%, the largest one-day decline since March 10, 2023. Concerns over France's budget deficit and the risk that rising oil prices could weigh on consumption and economic growth changed the mood in bond markets.

French bonds sold off, pushing yields higher, while investors bought bonds seen as safer, including German Bunds and US Treasurys. The gap between French and German 10-year yields sat near 79 basis points, close to its widest since April. Despite higher oil prices and elevated inflation readings, investors bought US government bonds, a move that could signal lower growth expectations amid a broader tech selloff.

Stocks fell hard alongside the bond rally. The Nasdaq dropped 2.6% on Thursday as investors fled tech shares over doubts about the profitability of heavy artificial intelligence spending. Rising oil prices and Middle East tensions added to the rush into government bonds. Only 15 trading days in the past decade have seen the 10-year yield move 19 basis points or more in either direction, a span that covers the 2020 COVID crisis, the 2023 regional banking crisis and the April 2025 tariff shock, according to Dow Jones Market Data.

The 2-year yield declined 0.188 percentage point to 4.635%, its largest one-day decline since August 2025, while the 30-year Treasury yield fell 0.151 percentage point to 5.286%, its largest daily decline since August 2024. "On a normal day, a decent-size move is a few basis points," Robert Tipp, head of global bonds at PGIM Credit, said. "You are getting three times that."

Treasury yield drop brings mortgage relief

The Treasury yield decline brought some relief for home buyers. Mortgage rates fell for the first time in nine weeks, according to Freddie Mac data. The benchmark 10-year Treasury yield influences borrowing costs for mortgages, auto loans and credit card debt, so the move could ease pressure on household budgets if it lasts. Lower mortgage rates would be welcome news for buyers who have watched affordability erode as borrowing costs climbed.

"Treasuries still provide a flight to safety quality," George Catrambone, head of fixed income Americas at DWS, said, adding that the turmoil in France "lends itself to a bit of a flight to safety bid." Catrambone noted that markets are pricing in an interest rate hold by the Federal Reserve next week. "It's anyone's guess as to how hawkish Warsh really is or isn't," he said.

Treasury yield outlook after the Fed meeting

The Treasury yield slide could be short lived. Post-meeting communication after the Federal Reserve's interest rate meeting next week may swing bond markets again. A US Treasury auction of five-year inflation-protected securities showed softer-than-expected demand, a reminder that buyers are picky even in a rally. Earlier in the month the 10-year yield had climbed as high as 5.3645% on Oct. 7, its highest since April 2002, so the market remains on edge.

The five-year TIPS auction result pointed to softer demand even as investors piled into nominal bonds. When bond prices rally on high demand, yields fall, and Thursday's session was a textbook case: heavy buying across maturities pushed prices up and yields down in one of the sharpest single-day moves of the year.