U.S. Treasury yields fell on Thursday as investors sought refuge in bonds amid a sharp decline in technology stocks following new inflation data. The 10-year Treasury yield dropped over 10 basis points to 5.089%, while the 30-year Treasury yield decreased by more than 9 basis points to 5.428%. The 2-year note yield also eased by over 4 basis points, closing near 4.757%, reflecting heightened demand for safe-haven assets amid market uncertainty.

The pullback in yields came after the Bureau of Labor Statistics reported that wholesale prices rose 6.3% annually in September, marking the largest increase since 2022 and surpassing economists’ estimates of 5.5%. This inflation surge followed a consumer price index report released the previous day, which showed a marginally higher-than-expected rise of 0.6% monthly and 3.7% annually. These inflation figures raised concerns about persistent price pressures across the U.S. economy.

Investors’ move into bonds was also driven by worries about the impact of inflation and higher interest rates on the fast-growing AI technology sector. Despite the inflation data, market expectations for rate hikes remained relatively steady, with the CME FedWatch tool indicating a strong likelihood of at least one more quarter-point Fed rate increase before year-end. Traders have increasingly priced in the possibility that interest rates will climb above the current target range of 3.75% to 4.00%.

Chris Zaccarelli, chief investment officer at Northlight Asset Management, noted that with two consecutive months of higher-than-anticipated inflation readings, the Federal Reserve is expected to raise rates again this year. Although Zaccarelli does not foresee a rate increase before the upcoming mid-term elections, he anticipates a quarter-point hike in December. Last month, the Fed implemented its first rate increase of 2026, raising the federal funds target range from 3.50%-3.75% to 3.75%-4.00%.