10-Year Treasury Yield Falls Below 5% Amid AI Selloff
By Tom LoBianco | Quincy News Correspondent
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Washington (Quincy News) — Investors sought safety in U.S. Treasury securities Thursday as concerns about the cost of financing the AI boom mounted.
The benchmark 10-year Treasury yield dropped below 5%, ending near 4.95%, marking its biggest single-day decline since the failure of Silicon Valley Bank in March 2023.
“It’s the first time since late June it’s been under the 50-day (average), and the yield is down almost 40 basis points from recent two-decade highs above 5.36%,” wrote Joe Mazzola at Charles Schwab in their daily investors note.
The shift followed weeks of volatility as investors weighed rising borrowing needs and concerns about the U.S. fiscal outlook. Total federal debt topped $40 trillion this year, while gross federal debt has exceeded 100% of gross domestic product for more than a decade.
Just a few months ago, analysts and investors viewed Treasury Secretary Scott Bessent’s increased buyback plan as an effort to ease pressure on longer-term bonds. Treasury said the purchases would support market liquidity, while analysts questioned whether they would address the broader concerns driving yields higher.
This week brought earnings reports and filings from tech giants driving the AI race, highlighting the cost of building data centers and other infrastructure. Meta said it expects capital expenditures of $135 billion to $145 billion in 2026, including principal payments on finance leases, to support its AI efforts and core business.
In its third-quarter SEC filing, dated Oct. 21, Meta described the financial risks associated with its technology investments.
“We have incurred significant indebtedness and other contractual commitments, including lease obligations, to finance these investments and expect to continue to incur additional obligations,” Meta reported. “Some of these investments have generated only limited revenue and reduced our cash flows, operating margin, and profitability, and we expect the adverse financial impact of such investments to continue for the foreseeable future.”
The warning appeared in a broader discussion of investments that includes AI and Reality Labs, the company’s virtual and augmented reality business.
In the bond market, the U.S. has lost its top credit rating from all three major rating agencies. S&P was the first to downgrade the U.S. from AAA to AA+ in 2011, citing rising debt and concerns about the effectiveness and predictability of federal policymaking.
Fitch followed in 2023, citing repeated debt-limit standoffs in Congress, expected fiscal deterioration and the nation’s growing debt burden.
Moody’s, which had assigned the U.S. its top rating for more than a century, was the last of the three agencies to downgrade. It lowered the rating from Aaa to Aa1 in May 2025, citing rising government debt and interest-payment burdens.
But even with those warnings, U.S. Treasuries have continued to attract investors seeking safety during market turmoil.
Meta entered the bond market in 2022 with an initial $10 billion sale, receiving ratings of AA- from S&P and A1 from Moody’s. Moody’s upgraded its rating to Aa3 in April 2024.
Corporate bonds generally offer higher yields than Treasuries of similar maturity, to compensate investors for the risk that the company won’t make its payments or that the bond will be hard to sell.
For Meta and other companies racing to build AI infrastructure, financing needs are growing as investors weigh how quickly that spending will pay off.
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