Treasury Yields Fall as Stocks Slide
Investors moved into shorter-term Treasury notes as a stock-market selloff deepened on Thursday.
Updated on Nov. 5, 2026 in Stock Markets
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The 2-year Treasury yield fell 10.4 basis points to 4.48%, reaching its lowest level since September 9, as the S&P 500 dropped 4.2% and the Nasdaq Composite fell more than 5%. The Nasdaq-100 entered correction territory amid the sell-off.
Why it matters
The move reflects investors shifting cash into front-end Treasuries and money-market funds, which reached a record $8.016 trillion, as fears of a negative shock grew. Expectations for Federal Reserve policy also shifted, with the probability of a December rate hike falling to 66.1% from 82.7%.
Thursday's moves included a 10.4 basis point drop in the 2-year Treasury yield to 4.48% and a 5.3% peak in the 10-year yield earlier in October. The December rate hike probability fell to 66.1% from 82.7%, and it remains unclear how durable these shifts will be.
The players
Federal Reserve
The Federal Reserve is the central bank of the United States, responsible for monetary policy including setting interest rates.
The details
Stocks sold off on Thursday, with the S&P 500 down 4.2%, the Dow Jones Industrial Average down 3.4%, and the Nasdaq Composite down more than 5%. Investors moved cash into front-end Treasury notes and money-market funds amid concerns about heavy exposure to tech stocks following the midterm elections.
Timeline
September 9: The last time the 2-year Treasury yield was this low.
October: The 10-year Treasury yield reached 5.3%, a 24-year high for longer-dated yields.
November 5, 2026: The stock selloff and Treasury rally occurred on Thursday.
December: The Fed is expected to potentially hike rates, with the probability now at 66.1%.
January: Democrats take control of Congress.
Market Dynamics
The 2-year Treasury yield's drop to its lowest since September 9 comes after the 10-year yield hit a 24-year high of 5.3% in October. That reversal sets up the Fed's December decision, which markets now see at 66.1% odds of a hike.
Investors with bond or money-market holdings saw yields fall sharply, so cash parked in short-term instruments may earn less going forward. Those with heavy tech-stock exposure face continued volatility as the selloff deepens.
The takeaway
Watch how yields and rate-hike odds respond to Friday's jobs report, since those will shape both bond and equity positioning into December. Reviewing portfolio exposure to rate-sensitive and tech holdings can help manage risk during periods of sharp market moves.
What happens next
The October jobs report is scheduled for Friday, and the Fed's December meeting will determine whether a rate hike occurs.
Further reading
Track the latest moves in Stock Markets for more on how selloffs like this one unfold.
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