Treasury Yields Post Biggest Drop Since 2023 as Fed Hike Bets Fade and Oil Jumps

Investors rushed into U.S. government bonds on Thursday, sending borrowing costs sharply lower even as oil prices climbed.

A big day for bonds

The 10-year Treasury yield fell more than 17 basis points to 4.972%, CNBC reported. It was the first time the yield had dipped below 5% since Sept. 23, and the largest one-day drop since March 10, 2023. The 2-year yield, which tracks expectations for Fed policy, fell more than 16 basis points to 4.659%.

"For the first time in a while, Treasurys are enjoying haven status," Larry Holzenthaler of Catalyst Funds told CNBC.

Fed hike odds shrink

CoinDesk reported at 2:01 p.m. ET that the odds of a Fed rate hike at next week's meeting were close to zero, and that the odds of no further hikes this year had risen to 28% from 10%.

Oil moves the other way

Brent crude rose 4% to $113.17 a barrel and U.S. crude closed at $99.47, CNBC reported. Oil rose after The New York Times, citing unnamed U.S. officials, reported that Washington and Israel were weighing a "short but intensive" round of strikes on Iran after the Nov. 3 midterms. CoinDesk noted that rates and oil, which moved closely together for months, have recently split apart.

Why it matters for crypto

Lower yields can make assets like bitcoin, which pay no interest, look more attractive. On Thursday, though, crypto traded with tech stocks and fell. Gregory Faranello of South Street Securities told CNBC that if energy prices "stay elevated, it could force the Fed's hand to do even more." That leaves oil as a key risk for crypto ahead of the Fed's decision.