A rally in Treasuries accelerated in Asia on Friday as a selloff in US tech stocks drove investors toward the safety of government debt. Treasury yields dropped at least two basis points across the curve, extending declines from the New York session. Bonds in Australia, Japan and New Zealand tracked the moves, with 10-year yields falling around five basis points.
The flight to safety gained momentum after disappointing earnings from tech giants such as Alphabet Inc. reinforced doubts about the AI trade, while a suspected hack of Binance added to the risk aversion. Benchmark Treasury yields have dropped almost 40 basis points in October, heading for their first monthly decline since February. "Bonds are rallying this morning with another safe-haven swoon after the tech results this week," said Kenneth Crompton, head of rates strategy at National Australia Bank in Sydney. Souring sentiment around AI-linked equities has been a primary catalyst for US government bond gains over the past month.
Traders are watching the policy outlook after the Fed and Reserve Bank of New Zealand held off from raising rates despite elevated energy costs. The Bank of Japan also kept its benchmark rate on hold. Andrew Ticehurst, a senior rates strategist at Nomura Holdings Inc. in Sydney, noted that ongoing nervousness about the valuations of the hyperscalers and the disappointing Alphabet result are triggering safe-haven flows into the bond market.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing