Quick Read The 10-year Treasury yield dropped 19 basis points to 4.95% as Meta’s 7% plunge drove investors out of AI stocks and into safety trades. With December rate-hike odds near 78%, TLT’s rally is fragile and could reverse fast if AI fears ease and capital returns to tech. Mortgage rates slipped only to 7.32%
Quick Read
The 10-year Treasury yield dropped 19 basis points to 4.95% as Meta’s 7% plunge drove investors out of AI stocks and into safety trades.
With December rate-hike odds near 78%, TLT’s rally is fragile and could reverse fast if AI fears ease and capital returns to tech.
Mortgage rates slipped only to 7.32% and need weeks of sustained lower yields before home buyers see meaningful relief.
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The 10-year Treasury yield fell 19.3 basis points to 4.953% on Thursday, October 22, 2026. Measured before the final close, it was on track for its largest daily drop since March 10, 2023. A basis point is one hundredth of a percentage point.
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The buying came from investors leaving AI stocks. Meta Platforms (NASDAQ:META) fell 7% after its results because its plan to issue non-voting stock to fund AI revived concerns about its capital commitments.
The Philadelphia semiconductor index dropped 6.7%, its biggest decline since June 23. The Nasdaq Composite lost 2.6% to 26,008.86, its biggest one-day percentage drop since early June. The S&P 500 fell about 1.2% to 7,663.43, while the Dow edged up 11.89 points to 52,867.98.
Invesco QQQ Trust (NASDAQ:QQQ) fell 2.86% to $704.47, and iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) gained 1.87% to $81.74. Fear drove that bond rally, and the Federal Reserve is still raising rates.
Safety Demand Outweighed Strong Economic Data
Treasury’s official par yield curve shows the 10-year closing at 4.96%, down from 5.13% on October 21. It was the first close below 5% since September 22, and on that occasion the yield jumped to 5.11% the next day.
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In market trading, the yield had topped out at 5.3645% on October 7, its highest since April 2002. The two-year fell 18.5 basis points to 4.638%, its biggest drop since August 2025, and the 30-year fell 15 basis points to 5.287%.
Jobless claims fell by 6,000 to 194,000, and inflation stayed persistent. Both figures normally push yields up. “They are rotating out of techs, out of the AIs, and into the more safety trades,” said Joe Saluzzi, co-head of equity trading at Themis Trading.
Thomas Urano, co-chief investment officer of Sage Advisory, said: “The flight-to-quality trade is winning in the Treasury space.” A rally that runs against the data can reverse quickly once the fear passes.
December Hike Odds Still Threaten Long Bonds
CME FedWatch odds of a hike of at least 25 basis points at the October 27 and 28 meeting fell to 7.2%, from 27.7% a week earlier and 55.4% a month earlier. Odds of a December hike slipped from around 86% at noon Thursday to about 78% later in the day.
TLT holds Treasuries maturing in 20 years or more, and long bonds lose more of their price than short ones when yields rise. That sensitivity is why the fund is down 7.08% over the year ended October 22.
Mortgage Rates Barely Moved Despite the Bond Rally
Freddie Mac’s 30-year average fell to 7.32% from 7.40%, the level it held on October 8 and October 15. It was the first weekly decline since at least early September, and the rate was 6.71% on September 3 and 6.19% a year earlier.
The 15-year average slid to 6.68% from 6.71%. Mortgage rates follow the 10-year with a delay and a spread, so yields need to stay lower for weeks before home buyers see real relief.
iShares U.S. Home Construction ETF (BATS:ITB) jumped 5.39% to $91.24, and Home Depot (NYSE:HD) rose 4.33% to $327.73. Those gains are large for a market where mortgage rates stay above 7%, and existing home sales ran at an annualized 3.99 million in September.
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Why TLT’s Rally Faces a December Test
TLT’s gain assumes Fed help that hasn’t come, and December hike odds near 78% leave room for long yields to rise again. If AI fears ease, money that left QQQ can go back into tech, and the demand for safety that raised Treasuries would fade.
Home Depot offers a different risk profile. It pays a 2.80% dividend yield, grew comparable sales 1.7% in its fiscal second quarter as customers took on smaller projects, and kept its fiscal 2026 guidance despite housing affordability pressure.
The real test comes when the FOMC meets on October 27 and 28, and PCE inflation data arrives on October 29. If the 10-year closes back above 5.13% on Treasury’s par curve, the whole fear rally will have reversed.
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