AI Sell-Off Drags Nasdaq Down 2.6% as 10-Year Yield Falls Below 5% and Oil Tops $113

Flight to Safety

A flight to safety is a shift of money out of risky assets, such as growth stocks, and into assets seen as safe, most often U.S. Treasury bonds. Because bond prices and yields move in opposite directions, heavy buying of Treasuries pushes their yields down. That is why a sharp equity sell-off often coincides with a sharp drop in Treasury yields. The pattern is not guaranteed. Treasuries rally in a flight to safety when investors fear weaker growth or market stress. If instead the main worry is inflation, bonds can sell off along with stocks, because rising prices erode the fixed payments bonds offer. Gold usually behaves as a haven too, but it can fall when yields or rate expectations rise. To read a flight to safety, look at several signals together: the direction of Treasury yields, defensive sectors such as consumer staples and health care outperforming, and volatility measures rising. When these line up, the market is pricing in risk aversion rather than a single-company story.