AI trade concerns reignite: safe-haven buying returns to global bond markets, capital flows back to US Treasuries.

Note that during Thursday's Asian trading session, US Treasuries rose, with the yen and Swiss franc strengthening in tandem. Investors rushed into safe-haven assets for shelter after stocks fell on renewed concerns over the AI trade. US Treasury yields fell by at least 3 basis points across the curve, with the 30-year yield touching 5.38%, its lowest since September 23. Australian and New Zealand government bonds also rose, while the yen gained as much as 0.3% against the dollar. Eugene Leow, senior rates strategist at DBS Bank, said: "Market sentiment seems to have become more fragile recently as investors reassess AI-related assets. Caution over profitability and return on investment appears to be quietly spreading. With US yields still high by recent standards, investors may want to hedge some risk by buying US Treasuries as a safe haven." The stock market decline has revived the safe-haven status of US Treasuries, after concerns over accelerating inflation had pushed yields to multi-year highs in recent weeks. The direction of the world's largest government bond market may depend in part on whether elevated oil prices or concerns over the AI stock trade gain the upper hand. The buying of US Treasuries comes as a deadly attack in Saudi Arabia clouded the supply outlook and drove crude oil prices higher. Elevated energy costs have deepened inflation concerns and prompted traders to bet that the Federal Reserve and other central banks around the world will raise interest rates further. The Bloomberg US Treasury Return Index has risen about 1.2% in October, after posting its largest single-month decline in nearly two years in September. Kenneth Crompton, head of rates strategy at National Australia Bank, said: "Despite the slow recovery in oil prices, US Treasuries are once again feeling inflows of safe-haven funds." The Australian 10-year government bond yield fell 3 basis points to 5.25%, while the New Zealand 2-year government bond yield slipped 2 basis points to 3.91%. The yen appreciated 0.3% against the dollar to 157.68, the Swiss franc rose 0.2%, and the dollar index was broadly flat. David Forrester, strategist at Credit Agricole, said: "The decline in S&P 500 futures is boosting the yen. Importantly, the rise is broad-based, strengthening even against the dollar, demonstrating the yen's safe-haven status when the AI boom is disrupted."