Yields slide in flight to safety. US Treasury yields plummeted today as markets rotated into quality assets, driven by continued government debt concerns from France and renewed AI jitters. Yields closed 13-18 bps lower across the curve, with the 2-year yield at 4.64% and the 10-year yield at 4.95%. Meanwhile, equities tumbled as AI investment concerns returned, pushing the S&P 500 and NASDAQ 1.21% and 2.60% lower, respectively.
Initial jobless claims dip to three-month low. Initial jobless claims fell 6k to 194k for the week ending October 17, marking the lowest number of applications for unemployment benefits in three months. Initial jobless claims are hovering around levels that haven’t been seen since the 1960s, highlighting the stability of the current labor market. Despite ongoing price pressures, layoffs remain limited, with only some companies announcing large cuts. Meanwhile, continuing claims, which measure the number of people receiving benefits, edged 25k higher to 1.73 million, the highest in six weeks.
French government bonds under pressure. French bonds continue to underperform their European peers as markets remain concerned over France’s debt levels, with the potential for more protests this weekend stirring additional worry. A broader flight to safe-haven assets today pushed the spread between 10-year French bonds and German bunds to the widest level since 2011. Elias Haddad, senior markets strategist at Brown Brothers Harriman & Co., said, “Political gridlock and public anger over the high cost of living are making it virtually impossible to repair public finances ahead of next year’s French presidential election.”