Investors rush into government bonds after an AI-led tech sell-off

What happened

On 15 October, a sell-off in technology shares, driven by fresh doubts about artificial intelligence, sent investors into government bonds. US Treasury yields had their biggest drop since August 2025: the 10-year fell to 5.08% and the 2-year to 4.73%. German, French and UK yields fell too.

It happened again on 22 October. After another steep fall in tech shares, the 10-year yield had its biggest one-day drop in more than two years. It edged up on 23 October but stayed below 5%, down from about 5.3% in early October.

Why bonds rise when shares fall

When investors get nervous, they sell riskier assets and buy ones they expect to hold their value. US government bonds are the main safe haven. Heavy buying pushes bond prices up, and because a bond’s fixed payments are now worth more, its yield falls.

A second force adds to the move. A big fall in share prices makes people feel poorer and companies more cautious, so markets expect slower growth and fewer rate rises. That lowers the expected path of rates, and with it long-term yields.

Two forces pulling against each other

This is the tension in markets right now. Oil above $115 pushes inflation up, which should push yields up. A flight to safety pushes yields down. Which wins depends on whether investors are more worried about inflation or about growth. This month, on the worst days, the fear of losses won.

Where it sits in the chain

This is link 4, long-term yields, moving for reasons that don’t come from the central bank at all. Investors’ appetite for risk can shift yields as much as inflation data can, at least for a while.

What to watch

• Whether the tech sell-off deepens or fades. Yields usually bounce back once fear subsides.
• The Fed on 28 October. Lower yields and shakier markets make a rate rise less likely.