Treasury Yields Fall for Third Day as 10-Year Drops to 5.10%

Treasury yields fell for a third straight session on Thursday, Oct. 15. The 10-year yield closed at 5.10%, down 9 basis points from Wednesday and its lowest close since Sept. 22, according to the Treasury Department's daily par yield curve.

The decline came even though both of the day's major U.S. reports came in hot. The 10-year yield is now 14 basis points below its Oct. 9 close of 5.24% and 19 basis points below its Sept. 30 close of 5.29%.

How did Treasury yields close on Thursday?

Long and intermediate maturities fell the most. The 5-, 10- and 30-year yields each dropped 9 basis points. The 2-year fell 5 basis points, and the 3-month bill was unchanged.

Maturity	Oct. 14 close	Oct. 15 close	Change
3-month	4.28%	4.28%	0.00
2-year	4.82%	4.77%	-0.05
5-year	5.00%	4.91%	-0.09
10-year	5.19%	5.10%	-0.09
30-year	5.52%	5.43%	-0.09
10s–2s spread	0.37 pt	0.33 pt	-0.04

Source: U.S. Department of the Treasury, daily par yield curve rates. Spread calculated from those closes.

The 30-year close was its lowest since Sept. 23. The 10s–2s spread was the narrowest since Sept. 28, extending the flattening that followed Wednesday's hot September CPI.

What data came out on Thursday?

Two reports, both stronger than forecast. The Producer Price Index for final demand rose 1.3% in September, the largest gain since March 2022, and 6.3% from a year earlier, the Bureau of Labor Statistics said. Energy prices at the producer level jumped 10.8%. Our September PPI data brief has the full breakdown.

Retail and food services sales rose 0.8% in September to $745.0 billion, the Census Bureau said, and August's gain was revised up to 1.3%. Gasoline station sales rose 6.4%. Excluding autos and gas stations, sales rose 0.2%. The figures are not adjusted for price changes.

Trading Economics said forecasts had called for a 0.5% monthly rise in PPI and a 0.3% gain in retail sales.

Why did yields fall after hot inflation data?

Trading Economics attributed the move to "a broad flight to safety" amid "a global equity sell-off and tech rout due to concerns over the sustainability of AI spending in a high-interest-rate environment." It said the PPI report "did little to shift expectations that the Fed would keep borrowing costs elevated for longer." Trading Economics, which tracks market quotes rather than the Treasury's par curve, put the 10-year's drop at nearly 13 basis points to 5.05%.

We did not verify the stock moves it cited and are not offering another explanation.

What does this mean for the Fed's Oct. 28 decision?

The Fed's next decision is due Wednesday, Oct. 28, after a quarter-point increase to a 3.75% to 4% target range on Sept. 16. Trading Economics said traders expect the Fed to hold rates steady this month but see a quarter-point hike in December. See our FOMC meeting schedule for 2026 and 2027 for every date and decision.