Investors have fled to safety in U.S. Treasury bonds after a sharp selloff in tech stocks.
The benchmark 10-year Treasury yield sank below 5 percent on Oct. 22 for the first time since Sept. 22, falling about 18 basis points to 4.97 percent.
Yields were down across the board. The 30-year yield fell by 12 basis points to finish the session at 5.29, the lowest since Sept. 22. The 2-year, which generally tracks Federal Reserve policy expectations, fell to a five-week low of 4.64 percent.
“What is happening is a rotation of capital and a flight to quality,” Russell Thompson, chief investment officer at Hilbert Group, said in a note emailed to The Epoch Times.
“That money is rotating into Treasuries to pick up the extra yield available at these levels, which is why yields have counterintuitively fallen.”
Tech stocks tanked on renewed concerns surrounding artificial intelligence (AI) spending.
Nvidia CEO Jensen Huang warned in a CNBC interview aired on Oct. 22 that capital scarcity could weigh on the industry’s growth.
“What is missing in the middle is the working capital to fuel that growth … because there’s just so much demand across so many sectors of AI, there’s a scarcity of capital,” Huang said.
“The demand of the capital is much greater than the availability of the capital. That’s going to get solved.”
The bond market has been at the center of Wall Street’s attention since the August–September spike. Yields have surged to their highest levels since the Global Financial Crisis, driven by fears of persistent war-driven inflation, concerns about America’s fiscal health, and competition for capital.
The Treasury Department took notice. Treasury Secretary Scott Bessent announced a more aggressive buyback initiative in August. The government often repurchases long-dated debt to apply pressure on yields.
AI Spending
From Amazon to SpaceX, tech companies are issuing billions in bonds to fund the AI buildout. But they are also competing for capital with each other and the federal government.
In this scenario, these companies may need to offer investors higher returns to attract more capital.
The tech-driven Nasdaq Composite Index fell by more than 650 points, or 2.4 percent, on Oct. 22. The Nasdaq 100, an index tracking 100 of the largest non-financial companies, plummeted by about 800 points, or 2.7 percent.
The broad-market S&P 500 also slipped by nearly 100 points, or about 1 percent. Blue chips took a hit as the Dow Jones Industrial Average fell by about 100 points, or 0.2 percent.
“Artificial intelligence has become an increasingly important driver of corporate investment and earnings growth,” Alex Cargal, vice president at Bel Air Investment Advisors, told The Epoch Times in an emailed note.
So far this earnings season, the AI hyperscalers have reported solid numbers and offered upbeat guidance. Most importantly to investors, however, these tech giants have committed to capital expenditures.
IBM, Meta Platforms, and SpaceX surpassed Wall Street’s third-quarter earnings expectations this week.
Alphabet and Microsoft will report next week, while Nvidia is set to release its earnings on Nov. 19.
Meta posted $825 billion in future spending commitments and logged a smaller cash burn. Most of SpaceX’s total capex in the first nine months of 2026 went to AI infrastructure.
“This current cycle of spending, as it relates to AI, is heavily driven by highly profitable companies with tremendous free cash flow,” Cargal said. “Yes, they are spending it more now, but they are spending it on AI investments that should lead to more revenue.”
One top AI hyperscaler has become the bellwether for tech bonds: Oracle.
Oracle’s bonds are inching closer to junk territory, which is when bonds fall below investment-grade credit ratings and are seen as higher risk. Sentiment has weakened, with the spread on the company’s five-year credit default swaps—insurance against default—having surged by almost 300 percent in the past year.
Higher Oil Prices
The jump in crude oil prices added to pressure on stocks.
Global Brent oil prices surged by almost 3 percent to $112 per barrel in overseas trading on Oct. 22. A barrel of West Texas Intermediate—the U.S. benchmark for oil prices—also rose by 2 percent to $99 on the New York Mercantile Exchange.
Energy markets reacted to a New York Times report, citing unnamed sources, that the United States and Israel may resume strikes on Iran following next month’s midterm elections.
“Crude oil fluctuates on news from the Middle East and Ukraine. Some headlines raise hopes, but most point to continued fighting and supply disruptions,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in an emailed note to The Epoch Times.
Natural gas also edged up by about 1.5 percent to $2.83 per million British thermal units after a slightly smaller-than-expected storage build.
