- The 10-year Treasury yield sat at 5.26% ahead of the ISM Services PMI print, holding above 5.25% even after Friday's soft jobs report.
- September payrolls rose only 29,000 and unemployment climbed to 4.2%, cooling bets on another rate hike after the Fed's September move to 3.75%-4.00%.
- EPB Research's Eric Basmajian read the 10-year yield's reversal higher as consistent with strengthening cyclical payrolls rather than a labor-market break.
- The S&P 500's forward 12-month earnings yield has fallen below the 10-year Treasury yield, and the 10-year yield now sits at about 5.3 times the index's dividend yield, the highest since the late 1990s.
- Inflation remains broad: over 62% of weighted core PCE components are rising above 3%, keeping Treasury yields in focus.
- Equities still rallied into the data — the Nasdaq closed at a record 27,190.86 (+1.19%) and the S&P 500 at 7,722.72 (+0.73%) — with WTI at $90.13, gold at $4,180 and bitcoin at $86,374.
- Dealer gamma pins SPY between a 768 put wall and a 771 call wall, with QQQ boxed between 740 and 752 into the 10:00 AM ET ISM Services PMI (consensus 55.0 versus 55.4 prior).
Quotes
“The S&P 500's forward 12-month earnings yield has fallen below the 10-year Treasury yield, indicating that investors can earn a higher yield from Treasuries”
“The 10-year Treasury yield reversed higher after initially falling on a weak September jobs report, in a move Eric Basmajian of EPB Research said was consistent with strengthening cyclical payrolls.”
“September payrolls rose just 29,000 and unemployment climbed to 4.2%, cooling bets on another rate hike after September's move to 3.75%-4.00%.”