New York – October 19, 2026 -- U.S. 10-year Treasury yields fell about 17 basis points last week while the Nasdaq 100 dropped 5.5%, the largest same-week declines in both since the April 2025 tariff turmoil, Bloomberg reported. The move caught investors who had bet heavily on a deeper bond slump after 10-year yields climbed over seven months to their highest levels in more than two decades.
AI stock sell-off restores Treasuries' haven role
The trigger was a sell-off in AI-linked technology shares. Treasuries showed early signs of behaving as a safe haven again, a role they have failed to play for much of the past few years, partly because oil-driven sell-offs can push stocks and bonds lower together. Commodity trading advisers, the trend-following funds that had built bearish Treasury futures positions at what Bloomberg called 'extremely short' levels, exited those bets last week and added fuel to the rally.
Rate-hike bets persist despite the bond rally
Traders at one point priced about a 50% chance of a Federal Reserve rate hike in October. They still expect one increase by year-end and another in 2027. Meanwhile, investment-grade companies, led by megacap technology, have sold about $1.7 trillion of bonds this year, up about 29% from a year earlier, as the AI build-out leans on debt markets.
Long-dated Treasury ETF gains 2.65% while leveraged short fund falls 5.07%
The iShares 20+ Year Treasury Bond ETF (TLT) rose 2.65% from the October 9 close to October 16, moving from $77.98 to $80.05. It holds about $47 billion in assets and charges a 0.15% expense ratio. The iShares 7-10 Year Treasury Bond ETF (IEF) gained 1.14%, from $89.40 to $90.42, with about $41 billion in assets.
Julius Baer found that 10-year Treasuries consistently delivered positive returns during equity drawdowns from 2000 to 2020. Strategist Afonso Borges said intermediate Treasuries should again serve as an effective portfolio hedge, according to Bloomberg.
On the other side of the trade, the ProShares UltraShort 20+ Year Treasury fund (TBT), which targets twice the inverse of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index, fell 5.07%, from $42.05 to $39.92. Its steepest one-day drop was 2.94% on October 15, when the 10-year yield fell 10.5 basis points, according to TheStreet. ProShares notes that returns over periods longer than one day can differ significantly from the daily target.
Invesco QQQ sheds 5.52% as inflation data and AI selling hit
The Invesco QQQ Trust fell 5.52%, from $751.27 to $709.80, matching the index's slide. It dropped 1.97% on October 14, when a hotter-than-expected inflation report pushed yields higher, and another 2.50% on Friday as the AI sell-off resumed.
CoreWeave's credit default swap spread hits a record 1,195 basis points
CoreWeave (CRWV) became the clearest gauge of stress in AI debt. Its shares fell 25.21%, from $82.08 to $61.39, including drops of 15.46% on October 14 and 11.91% on October 16. The spread on its five-year credit default swaps reached a record of about 1,195 basis points on October 15, and the yield on its October 2031 bond rose above 16%, The Motley Fool reported, citing roughly $52 billion in loans and lease obligations.
John Briggs, head of U.S. rates strategy at Natixis North America, told Bloomberg that investors watching AI-linked bonds lose value "will be less interested in buying new bonds."