U.S. 10-Year Treasury Yield Falls Under 5% as French Turmoil Fuels Flight for Safety — 3rd Update

By Paulo Trevisani and Emese Bartha

The 10-year U.S. Treasury yield fell below 5% for the first time in a month as a global bond selloff gave way to a flight for safety.

Concerns over France's gaping 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 the opposite happened in bonds perceived as safer, including the German Bunds and the U.S. Treasurys.

Despite higher oil prices and elevated inflation readings, investors bought U.S. government bonds, potentially signaling lower growth expectations amid a broader tech sell off.

The 10-year Treasury yield declined 0.193 percentage point to 4.952%, the largest one day yield decline since March 10, 2023. The 2-year yield declined 0.188 percentage point to 4.635%, the largest one day yield decline since August 2025, and the 30-year yield declined 0.151 percentage point to 5.286%, the largest daily decline since August 2024.

The decline in the 10-year Treasury yield provided some relief for home buyers, as mortgage rates fell for the first time in nine weeks, according to Freddie Mac data. The decline could be short lived, as post-meeting communication after the Federal Reserve's interest rate meeting next week may swing bond markets.

Despite last month's sharp increase in U.S. yields, "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," Catrambone said.

Meanwhile, the U.S. Treasury auction of five-year Inflation Protected Securities, or TIPS, showed signs of softer-than-expected demand.

The Treasury auction sold $26 billion of five-year TIPS with a high yield of 2.367%. That compared to a market yield of 2.3645% at the time, according to data from Tradeweb. At the previous auction, the high yield was 1.955%.

Elsewhere in global bond markets, the French 10-year yield closed at 5.082%, and rose as high as 5.142%, the highest intraday yield since June 2002. The German 10-year yield closed at 3.337%, down 0.079 percentage points.

The volatility witnessed in sovereign bond markets is no longer just a rates story, said Mitch Reznick, head of cross-border credit at Federated Hermes. It is leading to changes in risk appetite and driving a genuine decompression in corporate credit spreads, he said.

The cost of insuring euro-denominated credit against default rose to its highest in nearly seven months, with the iTraxx Europe Crossover index of euro high-yield credit default swaps reaching 329 basis points, S&P Global Market Intelligence data showed.

-Jessica Coacci contributed to this article

Write to Paulo Trevisani at paulo.trevisani@wsj.com and to Emese Bartha at emese.bartha@wsj.com

(END) Dow Jones Newswires

October 22, 2026 16:26 ET (20:26 GMT)