Funds fleeing tech stocks, U.S. Treasuries become a "safe haven," will the 10-year yield move towards 3.5% next?

Global stock markets are experiencing a wave of selling triggered by panic over the valuation bubble in technology stocks, with a large amount of risk-averse capital flooding into the U.S. Treasury market in search of a safe haven. According to the latest forecast from DBS Bank, if the stock market continues to decline, the yield on the U.S. 10-year Treasury bond could drop to a minimum of 3.8%, a significant decrease from the current level of about 4.07%. TD Securities expects that by the end of 2026, this benchmark yield will fall to 3.50%. Previously, Wall Street giants issued warnings, with executives such as Ted Pick from Morgan Stanley and David Solomon from Goldman Sachs cautioning that stock prices may decline further, highlighting the potential for a new round of gains in the $73 trillion bond market. On Wednesday, U.S. Treasuries rose across the board, with the benchmark 10-year yield falling to a one-week low as investors assessed the likelihood of further declines in the stock market. Yields on bonds of similar maturities in Australia, New Zealand, and Japan also decreased. Heavy Losses in Tech Stocks Trigger Chain Reaction, Surge in Risk Aversion Concerns over the overvaluation of technology stocks are spreading across global indices, with the semiconductor sector being the hardest hit. The combined market value of the Philadelphia Semiconductor Index on Tuesday and the Bloomberg Asia Chip Index on Wednesday evaporated by about $500 billion, with selling pressure highlighting market worries over an AI-related investment bubble. Charu Chanana, Chief Investment Strategist at Saxo Markets, stated that the buying in bonds reflects the selling in AI themes, as funds are flowing into safe-haven assets amid rising stock volatility. She noted that this is a bond rally driven by position adjustments rather than a macro-level turning point. Prashant Newnaha, Senior Rates Strategist at TD Securities, analyzed that CEOs' warnings regarding valuations and capital expenditures have drawn market attention. Multiple factors, including a potential U.S. government shutdown, weak economic data, and insufficient liquidity, have created a breeding ground for sustained risk aversion. As traders seek the most liquid safe-haven assets, demand for bonds will continue to rise. This continuation of risk aversion may further push down U.S. Treasury yields