Coverage: September 24th–October 1st, 2026
Wall Street spent the week discovering that softer inflation can coexist with a bond market fully committed to causing problems. Equities mostly held together through quarter-end, with the S&P 500 and Nasdaq logging their second consecutive quarterly gains. Wednesday itself was messier: the S&P 500 slipped 0.25%, the Dow fell 0.86%, and the Nasdaq gained 0.24%. Quarter-end trading remained remarkably resilient despite the rates shock
Then Thursday morning arrived. The 10-year Treasury yield reached 5.34%, its highest level since 2002. That is less “background noise” and more “someone brought a tuba into the conference room.”
The 10-year Treasury yield climbed to 5.34% Thursday morning after posting its largest quarterly yield increase this century. Higher energy costs, stronger growth expectations, government borrowing, and a reassessment of where policy rates ultimately settle have all helped push longer-term yields higher.
This is increasingly a global repricing of duration. France’s 10-year yield briefly reached 4.96%, Britain’s 30-year yield pushed above 6%, and Japanese government bonds extended a historic stretch of rising yields. France’s spread over Germany also widened to levels last seen during the eurozone debt crisis. Government borrowing costs are rising across several major economies
For investors, the implications extend well beyond bond portfolios. A 5%-plus Treasury market raises the hurdle rate for equities, corporate borrowing, mortgages, commercial real estate, and practically any asset whose valuation depends on cheap capital. Stocks have absorbed the move surprisingly well so far. The bond market keeps testing how long that arrangement can last.
August inflation arrived cooler than economists expected. The PCE Price Index rose 0.3% for the month and 3.4% from a year earlier, while core PCE increased 0.2% monthly and 3.0% annually. Markets responded by cutting the implied probability of an October Fed hike to roughly 37% Wednesday, down from nearly 71% a week earlier.
There is an asterisk. Changes to the government’s methodology helped lower the revised inflation readings, including roughly 36 basis points from core annual PCE. Meanwhile, consumers kept spending: personal consumption jumped 0.9% in August, while the saving rate fell to 4.1%, its lowest level since November 2022. Second-quarter GDP was also revised higher to a 2.2% annualized pace.
The Fed received some breathing room on inflation and another reminder that demand remains alive and well. Monetary policy apparently remains a choose-your-own-adventure book where every page somehow leads back to “wait for more data.”
Labor data delivered another strange combination. Initial jobless claims fell to 197,000 for the week ended September 26, near their lowest levels in decades. Planned layoffs also fell 18% from August and 20% from a year earlier.
Hiring looks considerably more cautious. September hiring plans were the weakest for that month since 2011, while ADP estimated private employers added 90,000 jobs after a downwardly revised 36,000 in August. Economists surveyed by Reuters expect Friday’s government payroll report to show roughly 90,000 jobs added and unemployment holding at 4.1%. The labor market continues to show low layoffs alongside restrained hiring
Anyone waiting for the AI infrastructure boom to misplace its corporate credit card had another rough week.
Micron forecast first-quarter revenue of about $61.5 billion, comfortably above the $57.02 billion analyst estimate. Customer commitments under long-term supply agreements climbed to $32 billion from $22 billion in June, while remaining performance obligations rose to roughly $150 billion from $100 billion last quarter. Fourth-quarter revenue more than quadrupled to $54.23 billion.
Micron shares gained less than 1% in extended trading after the report, following a year in which the stock has more than tripled. The numbers suggest AI infrastructure demand remains exceptionally strong. The muted share-price reaction suggests the expectations attached to that demand are equally exceptional.
Energy remains the awkward guest in every inflation conversation.
Brent crude moved back above $100 per barrel Thursday morning as uncertainty surrounding the U.S.-Iran conflict continued to affect global supply routes. U.S. benchmark crude traded near $92.
American producers are responding. U.S. crude production reached a record 13.955 million barrels per day during the week ended September 25. Yet the third quarter also showed just how unstable the energy backdrop has become, with U.S. crude futures ranging from roughly $67 to $107 per barrel.
Baltimore beat Dallas 34–31 in Rio de Janeiro after Tyler Loop drilled a 56-yard field goal on the final play. More impressive for the league’s accountants, the game averaged 24.9 million viewers on CBS, making it the most-watched international NFL game ever. Viewership peaked above 30 million during the closing minutes.
The league still has seven international games scheduled this season.