Big Tech Wobbles Drive Rush Into US Treasuries

Emerging as a stock-market haven

BlackRock says investors should overweight 10-year notes

US Treasury funds draw $14 billion this month

Hotter-than-expected US core consumer prices for September, released on Oct. 14, rekindled inflation concerns. The monthly increase was 0.3%. Renewed bets on a Federal Reserve rate hike in October pushed the 10-year Treasury yield as high as 5.329% during the session.

Buying picked up late in the day. The 10-year yield ended at 5.189%, down 0.14 percentage point from its intraday peak and below the previous session's 5.216%.

Investors are beginning to view long-term US Treasuries as a haven. Concerns have resurfaced over heavy borrowing by artificial-intelligence companies, while technology shares that had led the stock-market rally are wobbling. That has thrown the relative safety of government bonds into sharper relief.

Dan Ivascyn, chief investment officer at Pimco, said Treasury yields look attractive given elevated equity valuations and tight corporate credit spreads. Greg Peters, co-chief investment officer at PGIM Fixed Income, called 10-year Treasuries yielding more than 5% well suited for medium- to long-term holdings.

The shift is also showing up in the flow data. US Treasury funds have attracted $14 billion so far this month, the Financial Times reported on Oct. 13, citing EPFR data.

Investment banks and large asset managers have also turned more positive on US government bonds. BlackRock on Oct. 12 raised its view on short-term Treasuries to overweight and upgraded long-term Treasuries to neutral. Goldman Sachs also said 10-year Treasuries would be treated as a risk-off asset.

Some investors still warn of risks in long-term US government bonds. The possibility of further rate hikes and a widening US fiscal deficit remains an overhang.

Hwang Jung-soo, New York correspondent, Korea Economic Daily, hjs@hankyung.com