By Saeed Azhar and Arasu Kannagi Basil
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 told 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."
BNY's profit applicable to common shareholders jumped 20% to $1.61 billion, or $2.34 per share, in the three months ended September 30, 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 in the reported quarter from a year earlier.
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.
A surge in debt issuance to fund the artificial intelligence buildout has also contributed to the upswing in bond yields.
"There's just more debt in the world. There need to be buyers for that. The supply and demand is going to put upward pressure," Vince said.
This week's rout in AI stocks has, however, eased some pressure on the beaten-down 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 the AI trade and the infrastructure buildout, Vince said he would be surprised if there were a glut based on what's been built out so far.
"Will we need the product that those data centers are producing? Will we have a glut? I think the answer is we will need them," Vince said.
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.
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.
Average deposits are expected to pick up in the fourth quarter along with client activity, Chief Financial Officer Dermot McDonogh told Reuters.
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 in Bengaluru and Saeed Azhar in New York; Editing by Shinjini Ganguli)
