A wave of safe-haven buying reemerges as US Treasury yields across the board decline further.

The prices of US Treasury bonds continue to rise, with the medium-term US Treasury bond yields falling to the lowest level in a year, as market concerns about regional bank defaults in the US and ongoing trade tensions persist, prompting investors to seek safe havens. The 5-year US Treasury bond yields have dropped by as much as 4 basis points to 3.51%, the lowest level since early October 2024. Previously, the 2-year US Treasury bond yields fell to levels not seen since 2022, and the benchmark 10-year US Treasury bond yields fell below 4%, with the 30-year US Treasury bond yields also continuing their downward trend. Anna Wu, cross-asset strategist at Van Eck Associates, stated, "Today's rebound in the US Treasury bond market is due to investors seeking safe haven assets. It may be a subconscious reaction amid sharply rising uncertainty triggered by the credit crisis." Previously, due to the heightened risk aversion sentiment, the spot gold price briefly touched $4380, hitting a historic high. Gold has always been considered a safe haven asset during times of political and economic turmoil. As a reliable high-value commodity that is easily transportable and sellable anywhere, gold is the preferred safe-haven choice for investors in times of global unrest. With concerns mounting about the possibility of the crisis spreading following the disclosure of problem loans by two regional US banks, funds are pouring into US Treasury bonds as part of the global risk aversion trend. Issues such as fiscal deficits and trade tensions have also dampened risk sentiment. Apart from US bonds, the 10-year Australian government bond yields fell to 4.09%, the lowest level since early April, while Japanese government bond yields also declined during the same period. Comments from recent Federal Reserve officials have also supported the bond market, further reinforcing market expectations for more accommodative policies. Federal Reserve Governor Waller stated on Thursday that interest rates could continue to be reduced by 25 basis points, while new Federal Reserve Governor Milan advocated for larger rate cuts. Overnight index swaps have fully reflected the expectation of two 25 basis point rate cuts by the Federal Reserve before the end of the year, hinting at the possibility of further significant rate cuts. Eugene Leow, Senior Rates Strategist at DBS Bank, wrote in a report, "With the lack of official economic data, investors are focusing on negative news flows and increasing their bets on the Federal Reserve easing policy. We still believe that US yields will trend downwards in the short term, and this trend may become more pronounced if market sentiment deteriorates."