Bitunix Analyst:US Treasury Rally Can't Mask Supply-Demand Pressure—AI Sell-Off Triggers Global Asset Repricing

BlockBeats news, October 23 — Global markets displayed a rare cross-asset divergence. As tech stocks were sold off, capital rushed into US Treasuries: the 10-year yield fell 19.3 basis points in a single day to 4.952%—the largest single-day drop since March 2023—while the 2-year yield fell 18.8 basis points. Middle East tensions, French fiscal risk, and doubts over AI investment returns all warmed simultaneously, prompting investors to cut risk exposure. Bond short covering may have amplified the move, but it is not yet enough to prove that the market has fully shifted to recession pricing.

The Treasury rebound still faces structural constraints. US federal debt now exceeds $40 trillion, FY2026 interest expense is roughly $1.36 trillion, and the 20-year Treasury auction cleared at a yield of 5.469%—the highest since 1986. DoubleLine Capital remains significantly underweight on long-dated Treasuries, reflecting that short-term safe-haven demand and long-term financing supply pressure now coexist. Should economic doubts persist, yields could stay under pressure—but the government's massive issuance needs may also limit how long any long-bond rally can last.

Gold briefly broke below $4,000 per ounce, diverging from its traditional safe-haven pattern of rising alongside a weaker dollar and lower Treasury yields. This suggests that the tech sell-off may have triggered cross-market position unwinds, with some investors selling precious metals to meet liquidity needs. Markets also heard rumors of possible yen intervention, though no definitive evidence has emerged. Japan's September core CPI rebounded to 2.1% and core-core CPI rose to 2.4%, further solidifying expectations of a BOJ hike in December. Should the AI trade cool and narrow the US-Japan yield differential, the yen could also benefit from capital inflows.

The key ahead is whether this wave of Treasury buying represents short-term risk-off and short covering—or whether the market is beginning to lower its growth expectations. Rising oil prices could still aggravate inflation, while AI financing risk could suppress demand—and these two forces together will shape the direction of rates and asset valuations.