U.S. Treasurys are regaining favor as a safe-haven asset amid uncertainties about the economy, equities and credit markets. The shift was evident when Brent crude surged 4%, the 10-year yield fell 18 basis points and the S&P 500 declined 1.2%. This rotation is driven partly by concerns surrounding artificial intelligence, wider corporate bond spreads and fears about the U.S. public debt, which reached $40 trillion. After reaching 5.3%, the 10-year yield fell below the psychologically significant 5% threshold, fueling fears of missing a risk-free return above 5%. Over the longer term, investors remain skeptical because of persistent inflation and fiscal risks, with some favoring short-duration corporate credit.
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