AI trading concerns are rekindled: the global bond market reproduces safe-haven purchases, and capital flows back to US Treasury bonds

The Zhitong Finance App noticed that during the Asian trading session on Thursday, US treasury bonds rose, and the yen and Swiss franc rose at the same time. After the stock market declined due to renewed concerns raised by artificial intelligence trading, investors poured into safe-haven assets to seek refuge.

The full US Treasury yield curve fell by at least 3 basis points. Among them, the 30-year yield hit 5.38%, the lowest since September 23. Australian and New Zealand treasury bonds were also higher, and the yen rose by up to 0.3% against the US dollar.

Eugene Liu, senior interest rate strategist at DBS Bank, said: “Market sentiment seems to have become more fragile recently as investors re-examine AI-related assets. Cautious sentiment about profitability and return on investment seems to be creeping in. As US yields are still high by recent standards, investors may want to hedge some of the risks by buying US Treasury bonds for safe haven.”

The fall in the stock market has revived the safe-haven position of US Treasury bonds. Previously, concerns about accelerated inflation have driven yields to multi-year highs in recent weeks. The trend of the world's largest government bond market may depend in part on high oil prices and concerns about artificial intelligence stock trading who can gain the upper hand.

As purchases of US bonds appeared, the deadly attack in Saudi Arabia overshadowed supply prospects and boosted crude oil prices. High energy costs have deepened concerns about inflation and prompted traders to bet that the Federal Reserve and other central banks around the world will raise interest rates further.

After the Bloomberg US Treasury yield index recorded its biggest monthly decline in nearly two years in September, it has risen about 1.2% in October.

Kenneth Crompton, head of interest rate strategy at National Australia Bank, said: “Despite the slow recovery in oil prices, US Treasury bonds are once again feeling the inflow of safe-haven funds.”

Australian 10-year Treasury yields fell 3 basis points to 5.25%, and New Zealand 2-year Treasury yields fell 2 basis points to 3.91%. The yen appreciated 0.3% against the US dollar to 157.68, the Swiss franc rose 0.2%, and the US dollar index remained basically flat.

David Forrest, strategist at Crédit Agricole, said: “The decline in S&P 500 futures is boosting the yen. Importantly, this rise is comprehensive, and it is even strengthening against the US dollar, showing the yen's safe-haven position when the artificial intelligence boom is disrupted.”