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Treasury Yields Plummet as Service Sector Cools: Gold and Crypto Shine

The recent decline in 10-year Treasury yields, now at their lowest in 2025, reflects a cooling economic environment as indicated by the Institute for Supply Management's services gauge, which slipped to 52.8 in January from 54 in December 2024. This downturn in service sector activity suggests that economic growth may moderate in the coming months, prompting investors to seek safer assets. The reduced yields have also lowered the opportunity cost of holding non-yielding assets like gold, which surged to a new all-time high before paring some gains. Additionally, a weakening dollar has made gold more attractive to foreign investors, further boosting demand.

The rally in Treasury prices, alongside a decline in yields, has also contributed to a rebound in stock prices, as lower borrowing costs improve valuations. Meanwhile, cryptocurrencies like Bitcoin and Ether have gained appeal as alternative investments amid the weakening dollar and rising demand for safe-haven assets. As of 16:14 on February 5, the yield on the 10-year Treasury note stands at 4.42%, down from its last close of 4.51%, reflecting a 9 basis point drop.