Treasury gains accelerated during Friday's Asian trading session.
A large-scale selloff in technology stock themes across the United States and globally, including AI computing leaders and the semiconductor sector, drove global investors to actively shift toward U.S. government bonds in search of a safe harbor.
Treasury yields fell by at least 2 basis points across the curve, extending the downward move seen during New York trading hours.
Australian, Japanese and New Zealand bonds rose in tandem, with their respective benchmark 10-year yields falling by roughly 5 basis points each.
Disappointing results and forward guidance from AI cloud-focused mega-cap technology giants such as Google parent Alphabet and Amazon, especially cash flow figures that fell far short of market expectations, sharply strengthened market doubts about the AI trade theme and the pessimistic view that the AI bubble is about to burst, accelerating the flow of safe-haven capital.
At the same time, the world's largest cryptocurrency exchange Binance was suspected of being hacked, further deepening risk-averse sentiment.
The benchmark Treasury yield indicator in the U.S. government bond market, the 10-year Treasury yield known as the "global asset pricing anchor," has already fallen by nearly 40 basis points in October and is on track for its first significant monthly decline since February.
Kenneth Crompton, head of rate strategy at National Australia Bank in Sydney, said: "After this week's corporate earnings from technology companies, a fresh round of risk aversion this morning once again pushed bonds higher and yields lower."
During Friday's Asian trading session, Nasdaq futures extended losses to more than 2%. Amazon and Intel fell 7.7% and 23% respectively in overnight U.S. trading, Nvidia dropped 2.5%, Micron Technology fell 4.4%, and Oracle declined 4%. Intel, whose guidance badly missed expectations, plunged as much as 23% overnight.
As of press time, South Korea's KOSPI index, weighted more than 50% toward the two memory chip giants SK Hynix and Samsung, had fallen more than 5.6%, and the Korea Exchange triggered a sidecar mechanism on the KOSPI during the session; Japan's Nikkei 225 index fell nearly 3%.
As shown in the chart below, U.S. Treasuries are on track for their best monthly return since February 2025.
A Bloomberg benchmark Treasury index tracking U.S. government bond market returns has risen 2% in October and is poised for its largest monthly gain since February 2025.
Over the past month, worsening market sentiment toward AI-related stocks has been the main catalyst driving U.S. government bonds higher.
Federal Reserve Chairman Kevin Warsh said future rate decisions will depend on subsequently released economic data rather than any preset hawkish path, and this remark also provided firm bullish support for the short-term price rally in Treasuries.
Traders are closely watching the policy outlook.
Although elevated energy costs have increased price pressure, both the Federal Reserve and the Reserve Bank of New Zealand held off on raising rates this week, and traders are unanimously betting that the Bank of Japan will also follow the Fed and choose to stand pat.
With U.S. midterm elections approaching, the bond market faces another looming risk.
Investors are increasingly doubtful whether a possible renewed political gridlock in Congress can, as it has for decades, ease their concerns about the U.S. fiscal trajectory.
The day after the election, the U.S. Treasury will release its quarterly refinancing plan.
The market believes this will lay the groundwork for any major debt management policy adjustment.
For now, however, the market's focus remains on the technology stock selloff: investors are increasingly questioning whether massive AI spending can generate enough profit growth to justify current valuations.
Andrew Ticehurst, senior rates strategist at Nomura Holdings in Sydney, said: "Persistent market concerns about the valuations of hyperscale cloud service providers, combined with the latest extremely disappointing results from Alphabet, Amazon and Intel, are driving some safe-haven funds into the bond market."
He said the bond rally could continue because "we do not think Warsh appeared particularly hawkish at the post-meeting press conference, and these AI-related concerns appear likely to persist."
AI Trade Under Pressure, Treasury Market Quickly Takes Over: Global Capital Flows Begin Repricing for Cash Flow Certainty
As AI computing and semiconductor stocks were sold off, U.S. Treasuries once again demonstrated their portfolio safe-haven value.
Technology investors are reassessing the return timeline for massive capital expenditure, and some funds are turning to government bonds with higher liquidity and relatively certain repayment cash flows.
During Asian trading hours on October 30, Treasury gains continued, with the 10-year yield falling at one point to about 4.90%; Australian, Japanese and New Zealand government bonds strengthened in tandem, reflecting that this round of safe-haven demand has spread beyond the U.S. market.
Bloomberg bond market statistics show that in early Asian trading, Treasury yields fell by at least 2 basis points across maturities, while 10-year government bond yields in Australia, Japan and New Zealand each fell by about 5 basis points.
The U.S. benchmark Treasury yield has fallen by nearly 40 basis points cumulatively in October and is on track for its first monthly decline since February this year; meanwhile, the Bloomberg Treasury return index has risen about 2% this month and is poised for its best monthly performance since February 2025.
The former measures yield changes, while the latter measures bond investment returns, and together the two data sets point to one conclusion: Treasuries are absorbing strong safe-haven demand generated by the decline in risk appetite toward technology stocks.
The key to this round of asset rotation is that the market has begun to distinguish between "growth in AI demand" and "the cash returns investors can actually obtain."
From an industry mechanism perspective, cloud revenue growth must pass through server delivery, data center power supply, network interconnection, actual utilization improvement and customer payment collection before it can be converted into cash flow that covers construction spending and financing costs.
Strong orders for GPUs, HBM and liquid cooling equipment can prove that construction demand exists, but cannot by itself prove that the capital return of every project is sufficient to cover the cost of funds.
As investors raise their requirements for cash flow realization, stock valuations and corporate credit risk compensation may come under pressure at the same time, while government bonds receive safe-haven support.
This also explains why technology stocks can fall while Treasuries rise: the market is reducing its trust in companies' forward earnings and financing capacity, while some funds are increasing allocations to government bonds.
Treasuries have restored their role in hedging equity drawdowns during this adjustment, but this protective capacity still depends on the source of the shock: earnings and credit concerns are usually favorable for safe-haven buying, while a renewed loss of control in energy inflation could simultaneously depress stock and long-duration bond prices.
U.S. Treasury Secretary Bessent Reassures on Financing, Market Still Picking Risks: Can Treasury Gains Lower AI Costs?
Bessent's latest views and market trading are not necessarily contradictory.
He stressed that new cloud companies are only part of the AI ecosystem and that financing deals are still getting done, citing Meta's use of equity financing as an example to show that capital markets can still provide funds for construction.
This answers the question of "whether financing channels are still functioning"; investors reducing technology holdings and buying Treasuries are assessing whether "current prices are enough to compensate for earnings, cash flow and credit risk."
The ability to complete financing does not automatically mean financing is cheap, nor does it mean all projects can earn sufficient returns.
From a financing mechanism perspective, the pricing of newly issued corporate bonds usually includes the benchmark rate of the same maturity plus compensation for credit, liquidity and other risks.
Therefore, a decline in Treasury yields can lower the benchmark portion of financing costs, but if credit spreads for companies such as CoreWeave widen faster, their overall financing costs may still rise.
For cloud giants with ample operating cash flow, the pressure is more reflected in the return threshold for new investment and equity valuation discounting; for new cloud companies that rely on continuous external financing, the pressure will also directly affect construction progress, equipment procurement and refinancing capacity.
A stronger Treasury market may therefore first reflect capital flight to safety rather than a comprehensive improvement in the AI financing environment.
The Federal Reserve's pause has given room for bond buying, but it has not declared an end to tightening.
On October 28, the Federal Reserve voted 10 to 2 to keep the federal funds rate target range at 3.75%–4%, with two dissenters favoring a 25 basis point rate hike.
Warsh acknowledged that financial and credit conditions facing some businesses and households have already tightened, while emphasizing that overall financial conditions still cannot be called tight and that more information is needed for future policy.
This supports the judgment that "no additional aggressively hawkish signal that worries the market was released," but it is not enough to infer that rate cuts are imminent.
Bessent's assessment of energy corresponds to another potentially more durable positive path: if geopolitical conflicts ease and oil supply returns to abundance, inflation and borrowing costs may decline.
He also said that another rate hike in the future would not necessarily constitute a policy mistake.
Taken together, the two statements mean that the Treasury Department's optimistic expectations are mainly based on economic resilience and easing energy pressure, rather than relying on immediate monetary policy easing to support asset prices.
For investment allocation, Treasury duration and corporate credit need to be judged separately: holding Treasuries allows participation in price gains from falling yields, while buying AI corporate bonds also requires bearing the risk of further credit spread widening.
In the next stage, long-end Treasuries will also face fiscal expectations after the midterm elections, as well as the issuance arrangements revealed by the quarterly refinancing announcement on November 4.
Safe-haven demand can support current bond prices, but long-term supply, the record pace of long-term fiscal deficit expansion and inflation risks will still affect the term premium investors demand.
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