Treasury yields rose on Friday, October 23, 2026, partly reversing the previous session’s sharp decline, but the benchmark 10-year yield remained just below 5%. Lingering concerns about the sustainability of the artificial intelligence-led stock rally continued to support demand for US government bonds.
Key Takeaways
- The 10-year yield rose 3.7 basis points to 4.992%, following a 19.3-basis-point decline on Thursday.
- Despite Friday’s rebound, the benchmark was heading for its third consecutive weekly decline.
- US business activity continued to expand, while market pricing assigned a lower probability to a Federal Reserve rate increase the following week.
Table of Contents
- Treasury yields recover only part of Thursday’s decline
- AI concerns compete with inflation and supply pressures
- Business activity moderates as Fed hike odds fall
- Conclusion
Treasury yields recover only part of Thursday’s decline
The 10-year yield remained about 11 basis points lower for the week in Friday’s trading snapshot. Its daily increase therefore represented a partial reversal of Thursday’s bond rally, rather than a return to the previous week’s level. Bond prices and yields move in opposite directions.
The recovery extended across maturities, with both two-year and 30-year yields rising. Even so, the two-year yield was heading for a fourth consecutive weekly decline, its longest such run of 2026.
The Treasury Department’s daily par yield curve methodology explains how its published curve relates yields to maturities using indicative market quotations obtained at approximately 3:30 p.m. each business day. That daily statistical series is distinct from the intraday market snapshot described here.
| Item | Details |
|---|---|
| Two-year Treasury yield | 4.68%, up 4.5 basis points on Friday. |
| 30-year Treasury yield | 5.315%, up 2.8 basis points on Friday. |
| 10-year TIPS breakeven rate | 2.349%, a market-based gauge of inflation compensation over the next decade. |
AI concerns compete with inflation and supply pressures
Doubts about AI-related stocks had encouraged investors to seek safer assets on Thursday, when the 10-year yield fell 19.3 basis points. Friday’s rebound left the benchmark close to, but still below, the closely watched 5% threshold.
JoAnne Bianco, partner and senior investment strategist at BondBloxx Investment Management, said she expected the 10-year yield to move above 5% again, while cautioning against assuming an unchecked rise. She identified sticky inflation, increased Treasury supply, higher term premiums and elevated energy prices as potential sources of upward pressure on yields.
Those comments describe an investment strategist’s outlook, not a confirmed future move. The week’s decline and Friday’s rebound show the competing pressures on bonds rather than establishing which will dominate.
Business activity moderates as Fed hike odds fall
S&P Global’s flash US Composite PMI Output Index eased to 57.6 in October from 58.4 in September, which had been its highest reading in five years. The index remained above the 50 threshold separating expansion from contraction, indicating slower growth rather than a decline in activity.
CME FedWatch pricing put the probability of a Federal Reserve increase of at least 25 basis points the following week at 8.3%, down from 15.5% a week earlier and 70.9% a month earlier. These probabilities reflect market pricing, not a commitment by policymakers.
Conclusion
Treasury yields recovered on Friday without erasing the week’s decline. The following week’s Federal Reserve decision is the next policy event to watch, with market pricing showing sharply reduced expectations for a rate increase.
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