U.S. 10-Year Treasury Yield Falls to 4.97% as AI Stocks Slide
Key Facts
The U.S. 10-year Treasury yield fell to 4.97% on Thursday, from 5.13% at the close on Wednesday, after topping 5.30% earlier in October. The Associated Press said investors turned to government bonds in search of safer assets as AI stocks retreated. The shift in the bond market came alongside a wave of stock selling, making the drop in yields a reflection of demand for safe havens. Eugene Liu, chief rates strategist at DBS Bank, said investors were "reconsidering AI-linked assets." He added that "greater caution about profitability and return on investment is beginning to emerge."
The pressure on stocks was clear at Wall Street's close: the S&P 500 lost about 93.74 points to 7,663.43, down 1.2% in its worst session since July. The Nasdaq Composite fell 694 points to 26,008.86, a decline of 2.6%. By contrast, the Dow Jones Industrial Average rose 11.89 points to 52,867.98, or 11 points, according to the agency's tally. Weakness in technology and AI stocks spread to Asia during the same session. South Korea's Kospi fell 3.5%, Hong Kong's Hang Seng 3%, and Japan's Nikkei 225 2.7%.
CoreWeave was among the sector's hardest-hit stocks, with its shares falling 10.1% on Thursday amid investor concerns about its debt. The company borrows to buy Nvidia AI chips, then leases them to customers through cloud computing services. According to a Reuters report published by Investing.com, the company's debt stood at about $50 billion as of October 16. The cost of insuring its debt against default rose to about 1,200 basis points during the week of October 16, while yields on some of its bonds climbed to about 15%–16%. These indicators put financing for computing infrastructure at the center of market concerns, as borrowing has become a key part of funding equipment purchases needed for expansion.
Investors' sensitivity reflects the scale of financing required to expand data center and computing capacity, as well as differences in project risk depending on how close projects are to operation. A Carlyle report estimated that private credit could be asked to provide about $1 trillion to finance AI-related computing expansion, warning of lending concentration in the sector. Reuters quoted a U.S. credit strategist at SMBC as saying investors favor financing high-return data centers when projects are closer to completion and face fewer hurdles before entering service. The strategist said: "There is still a price; investors remain comfortable financing this, but they are asking for greater compensation." These demands make financing terms more important for projects further from operation, as their ability to attract lenders depends on the required return and expected risks.
CoreWeave has previously relied on financing facilities backed by GPU units to expand its business: it raised a $2.3 billion facility in 2023, followed by a $7.5 billion facility in 2024 with investors including Blackstone, Carlyle and BlackRock. In March 2026, it secured an $8.5 billion facility led by Blackstone Credit & Insurance. At the sector level, long-term customer contracts may support AI loans, but they can raise concentration risks when repayment depends on a limited number of customers. A Reuters report said lenders may demand wider spreads, lower leverage and stronger covenants if financing costs remain high. That makes continued financing dependent on borrowing terms and customers' ability to honor and renew their contracts.
In energy markets, Brent crude jumped 4% to $113.17 a barrel on Thursday, after touching its highest level in five months, compared with a level below $97 at the start of October. The Associated Press linked the price rise to uncertainty over when the global energy sector would return to normal amid the war with Iran. Oil's advance came as Treasury yields and U.S. stocks fell, adding another factor for investors to track in market movements. Against the backdrop of the bond market, the Bloomberg Treasury yield index rose about 1.2% in October, after its biggest monthly loss in nearly two years in September. The index's shift in performance this month places Thursday's decline in the 10-year yield within a broader period of volatility in the Treasury market.
Attention now turns to the Federal Open Market Committee meeting scheduled for October 27 and 28, with a news conference set for October 28. The following day, the Bureau of Economic Analysis is scheduled to publish its advance estimate of U.S. third-quarter GDP at 8:30 a.m. The meeting and data releases follow a session in which U.S. stocks fell and the 10-year Treasury yield dropped to 4.97%. Markets are also watching financing for AI infrastructure companies amid higher borrowing costs and lenders' demands for tighter terms. How these developments are interpreted will depend on what the meeting and growth data show in the days ahead.