Three weeks ago the story was that bonds were the thing breaking. The ten-year hit a 24-year high, the thirty-year went through 5.4%, and the BofA line going around was that the “AI trade” was the last line of defense for the Treasury market. Stocks were holding up the bond market, in other words, by being so good that nobody had to look at the yields.

This morning the MarketWatch headline says yields just had their biggest drop since the 2023 banking crisis, and CNBC has the ten-year back under 5% “as investors seek cover from AI worries.” Bloomberg says the haven trade is returning. So the dependency has flipped direction. The thing that was propping up Treasuries is now the thing sending people into them, and I doubt anyone drew that arrow in advance. Nobody’s model had the same asset class getting bought for opposite reasons within a month.

It’s a tidy loop, and I distrust tidy loops. A tech rout pulls money into bonds, which pulls yields down, which should help the tech valuations that are hurt by high yields, which in theory stabilizes the rout. That’s the comforting reading. The uncomfortable one is that oil keeps jumping and the U.S. is reportedly preparing for a long standoff with Iran, and September CPI was 3.7%. Yields falling in the middle of that tells you the money is scared of equities more than it’s calm about inflation. Fear can move a price without changing the underlying problem.

The FT headline, “Winter arrives in markets,” is a bit much, but I get why somebody wrote it. A week ago people were still saying buy the dip.

Meanwhile a personalised melanoma vaccine cut recurrence in a big trial, and Moderna’s stock fell because the data leaked on social media first. A good result, and the price reaction was about who found out when. Markets do that a lot.

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