10-Year Treasury Yield Falls Below 5% as AI Fears Send Investors Into Bonds: What It Means for Mortgage Rates

The bond market just gave borrowers a small break. On Thursday, Oct. 22, the 10-year Treasury yield fell back below 5% for the first time in about a month, as worries about the AI boom pushed investors out of tech stocks and into government debt.

The move matters well beyond Wall Street. The 10-year yield is a key benchmark for mortgage rates and many other long-term loans, and it has also been a big headwind for stock valuations this fall. Here is what happened, why it happened and what it could mean for your money.

Why did Treasury yields fall below 5%?

Treasury yields dropped on Thursday, Oct. 22, because investors sold tech stocks on renewed doubts about the AI spending boom and bought safer government bonds instead. Heavy buying pushes bond prices up and yields down, which sent the 10-year yield to about 4.99%, below 5% for the first time since Sept. 23.

According to Reuters, the benchmark 10-year yield was last down about 15 basis points at 4.994% on Thursday, compared with 5.146% late Wednesday. A basis point is one-hundredth of a percentage point, so 15 basis points equals 0.15 percentage point. Yahoo Finance's live coverage said the 10-year was on track for its biggest one-day drop in more than two years, and that the 30-year yield had slid about 10 basis points to 5.32% earlier in the session.

The trigger was a rough day for technology shares. Meta fell more than 5% after its quarterly results, semiconductor stocks dropped more than 5%, and the Nasdaq Composite fell more than 2%, Reuters reported. When investors get nervous about stocks, they often park money in Treasurys, which are backed by the U.S. government.

"To the extent investors believe that those (AI) earnings are real... they are buyers of these stocks," Rick Meckler, a partner at Cherry Lane Investments, told Reuters. On Thursday, fewer investors seemed willing to make that bet.

Why the drop is surprising right now