US 10-year Treasury yield levels not unprecedented, BNY CEO says

By Saeed Azhar, Arasu Kannagi Basil and Pritam ‌Biswas

Oct 15 (Reuters) - The levels ​the benchmark 10-year ​US Treasury yield has touched this year are not unprecedented, the CEO of the oldest US bank told Reuters, as a bruising selloff in government debt lifted yields to multi-decade highs.

The 10-year US Treasury yield, a yardstick for global ‌borrowing costs and asset prices, posted its sharpest rise since 1994 in the July-September period.

"We got 10-year rates ⁠to like, call it five and a quarter. There's nothing particularly unusual in history about 10-year rates at that level. We've had arguably low levels for a very long ‌time," BNY CEO Robin Vince said in ‌an interview with Reuters on Thursday.

"People get very caught up. It has happened quickly, for sure, but with what I would view as more of a normalization of the curve."

Global bond markets have come under intense pressure this year as energy prices remain elevated, ​while the AI boom is supporting economic growth, a combination that has heightened worries about inflation and rising interest rates.

"You can make a good case that it is actually the strength of the US economy that's one of the primary drivers of inflation and the ⁠move higher in rates," Vince said.

Brian Jacobsen, chief economic strategist at Annex Wealth Management, echoed Vince's views.

"The bigger adjustment may be psychological. Investors, borrowers and businesses may simply need to get ​used to these levels. There will be swings along the way, but I would not assume we are going back to the ultra-low-rate world anytime soon," Jacobsen said.

AI ROUT

The latest hot US inflation report sent rate-hike ​bets soaring and deepened investor concerns about the risks posed by rising borrowing ‌costs in the capital-intensive AI industry.

This week's rout in AI stocks eased some pressure on the bond markets, with investors flocking to safe-haven government debt in the face of the tech selloff, pushing US yields down ⁠across the curve.

The 10-year Treasury yield was headed for the largest one-day decline since early August 2025 on Thursday.

Asked about financial structures in the AI landscape, Vince said on a post-earnings media call on Thursday that over time weak structures will get exposed, and that's the evolution of financial markets and the development ⁠of things.

DEPOSITS EXPECTED TO PICK UP IN Q4

In a statement, Vince said that client demand is continuing to grow and BNY's sales and pipelines remain very healthy ​across products and regions.

BNY has grown into the world's largest custodian. The company sits at the center of global capital markets, safeguarding and administering trillions of dollars in client assets, while processing trades and moving securities and cash between financial institutions.

Average deposits are expected to pick up in the fourth quarter along with ‌client activity, Chief Financial Officer Dermot McDonogh told Reuters.

BNY on Thursday reported a 20% jump in profit applicable to common shareholders to $1.61 billion in the third quarter, driven by interest income growth and stronger market ‌levels that boosted the value of client assets. Assets under custody and administration rose 10% to $63.4 trillion from a year earlier.

The New York-based firm is also ⁠benefiting from a rise in interest rates as it reinvests ‌cash from maturing investment securities at higher ​yields.

Net interest income — the spread between earnings from assets and costs on liabilities — accounts for roughly 25% of BNY's revenue, McDonogh said.

(Reporting by Arasu Kannagi Basil and Pritam Biswas in Bengaluru and Saeed Azhar in New York; Editing ‌by Shinjini Ganguli)

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