10-Year Treasury Yield Holds Under 5% as AI Fears Linger

TL;DR: The 10-year Treasury yield rose 3.7 basis points on Friday to 4.99%, staying just under 5% a day after its biggest one-day drop since March 2023. Investors are uneasy about debt-funded AI spending and oil above $100 a barrel. For you, borrowing costs stay high even as bond prices recover.

What happened to Treasury yields on Friday?

The 10-year Treasury yield rose 3.7 basis points to 4.99% on Friday, according to Business Recorder. That is a small move after a big one. On Thursday the same yield plunged 19.3 basis points, its largest drop since March 10, 2023, the day SVB Financial Group was closed by regulators after the bank's failed attempt to raise capital.

The 10-year is still down about 11 basis points on the week and on pace for a third straight weekly decline, its longest run lower since June. CNBC reported that Thursday was the first time in a month the yield had fallen below 5%. A drop that size in one session tells you more about fear than about fundamentals. It also sets the bar for every private deal you are being pitched.

Across the curve, the 2-year ended at 4.69% and the 30-year at 5.316%, per Business Recorder.

Maturity	Friday yield	Weekly move
2-year	4.69%	Down about 5 basis points
10-year	4.99%	Down about 11 basis points
30-year	5.316%	Down nearly 13 basis points

The gap between the 2-year and 10-year sat at a positive 29.6 basis points, according to Business Recorder. That means the 10-year still yields more than the 2-year, so the curve slopes upward instead of inverting.

Why are investors worried about AI?

The drop was driven by fear of how AI is being paid for. CNBC wrote that investors "continued to express misgivings over the massive debt tech companies are taking on to finance their build-out of AI networks." When that worry hits stocks, money tends to move into Treasurys, and yields fall.

The doubts reach past debt to returns. Torsten Slok, chief economist at Apollo, wrote that outside the seven largest tech companies, AI has so far brought U.S. companies "zero financial payoff," according to heise online. That is one economist's reading of the data, not a settled fact. It does show how a spending story can become a bond rally in a day.

What else is moving yields?

Oil is the second pressure point. Crude futures closed above $100 a barrel on Friday, and CNBC quoted Chris Rupkey, chief economist at Fwdbonds, saying oil was the only consistent storyline that day. Higher energy prices keep inflation worries alive, which limits how far yields can fall.

That is why the bond rally looks fragile. Business Recorder noted it has come "even as economic data point to continued price pressures." On rates, Business Recorder cited CME FedWatch putting the probability of a hike of at least 25 basis points at 9.4%, down from 15.5% a week earlier and 70.9% a month earlier. Those odds have swung hard, and they can swing back.

What does this mean for your portfolio?

A 10-year yield near 5% is the benchmark behind mortgages and credit cards, as CNBC put it. It also sets the bar every private investment has to clear. If a Treasury pays close to 5% with no lockup and no sponsor risk, an illiquid fund has to show you a clear premium for the wait. Start with the downside, then ask what the upside pays for it.

Private credit is where this bites first. Our guide to private credit yields and risks covers what the extra yield is paying you for, and our money-market versus private credit comparison shows how thin that premium gets when Treasuries sit near 5%.

If you own a public vehicle such as a BDC, higher rates cut two ways. They can raise the income on the floating-rate loans the vehicle holds, but they also squeeze the companies that borrowed that money and can pull the share price down. Our BDC investing guide walks through both sides.

What to watch next

The next test is whether the 10-year can stay under 5% without another equity scare. Watch tech earnings, debt issuance tied to AI, the oil price and the next inflation reading. If oil stays above $100 and prices stay firm, a move back over 5% is plausible. The Fed odds above show how quickly expectations can flip.

Common mistakes

The first mistake is reading one big down day as a trend. It isn't one. Thursday's drop was the largest since 2023 and Friday already gave a little back, while a third straight weekly decline would mean more but still sits beside oil above $100 and data that point to continued price pressures.

The second is treating a falling yield as good news for every holding. A yield drop driven by fear of an AI selloff is a sign investors are running to safety. That is not comfort.

The third matters most for you. Comparing a private deal's projected return to a Treasury yield without adjusting for lockup, fees and the chance of loss makes the private deal look better than it is. A Treasury yield is a quote you can act on today. A projected IRR is a sponsor's estimate. Ask what you would still have if the sponsor's case does not play out, and whether the premium over 4.99% still covers the years you cannot get your money out.

FAQ

Why are 10-year Treasury yields falling?

CNBC tied this week's drop to investor worries about the debt tech companies are taking on to build AI networks and to higher oil prices. Both hit stocks, and Treasurys rose as a result, which pushes yields down.

Why did the 10-year Treasury go down on Thursday?

The yield fell 19.3 basis points, its biggest one-day drop since March 2023, according to Business Recorder. CNBC linked the week's move to AI spending fears and oil. It rose a little on Friday.

Is it good when the 10-year Treasury yield goes up?

It depends on who you are. Higher yields pay savers and new bond buyers more. They also raise borrowing costs for mortgages and leveraged deals, and they can pull down stock and bond prices you already own.

Should I buy AI stocks after this week's selloff?

No source here supports a pick, and we don't make buy or sell calls. The reporting does show that Apollo's chief economist sees little AI payoff outside the Magnificent Seven so far.

Next step

Pull up the yield on your most illiquid holding and set it beside the 4.99% 10-year Treasury. If the gap is small, ask the sponsor what you are being paid for the lockup. For more of this kind of analysis, join the free AIN briefing.

Educational content only. Not investment, tax, or legal advice. Not an offer or solicitation to buy or sell securities. Past performance does not guarantee future results. Private-market investments are illiquid and involve risk of loss, including total loss of capital. Consult qualified advisers. Angel Investors Network is not a broker-dealer or investment adviser.