U.S. bond yields plunge as AI boom sustainability fears resurface

U.S. Treasury yields plunged on Thursday, with the 10-year note falling below 5% for the first time in over a year, as renewed fears about the sustainability of the AI boom drove investors toward safe-haven government debt. The yield was on pace for its biggest daily drop since August 2025. The selloff in risk assets was led by a 2% slump in the Nasdaq and a 6% drop in Meta shares following its earnings report and announcement of new non-voting shares to fund AI expansion. While U.S. data showed persistent inflation, investors priced out a Federal Reserve rate hike next week, with odds falling to 10.5% from 27.7% a week ago. Canadian 10-year yields fell a more modest 5 basis points, as markets priced an 82% chance of a Bank of Canada rate hike next week. The 30-year U.S. yield dropped 10 basis points to 5.337%, and the 2-year yield fell 10.7 basis points to 4.716%.