Long-term bond yields touch their highest since 2002, then pull back before the jobs report

Methodology note: Night report, generated after the October 1 US close. Sources cited inline.

Long-Term Yields Touched 2002 Highs, Then Fell Back Before Friday's Jobs Report

The thirty-year yield traded above its 2002 high in the morning but did not close there. The ten-year reached 5.344% intraday, its highest since April 2002, then finished about 5 basis points lower at 5.243%. The thirty-year ended near 5.613%, back under the 5.644% line. Yields fell even though ISM's prices-paid index jumped to 77.9, so the reversal did not come from softer data. It came from investors buying after a 50-basis-point rise in 18 sessions and squaring positions before payrolls. Stocks finished slightly higher, led by chips and Accenture. One reversal does not end a rise of this size. A thirty-year close above 5.644% would resume it; a close under 5.44% would say it is fading.

• The ten-year hit 5.344% intraday, its highest since April 2002, before easing 5 basis points to 5.243%; the thirty-year closed near 5.613%. The 2002 high held at the close, so the break the morning report described has not been confirmed.
• ISM manufacturing slipped to 54.5 from 54.6 against 55.0 expected, while prices paid jumped to 77.9 from 71.1. Factory costs rose at the fastest pace since May, and yields still fell, so the drop owed more to positioning than to the data.
• Initial jobless claims fell 1,000 to 197,000, against 200,000 expected, with the four-week average at 200,000. Layoffs remain low going into Friday's payrolls.
• October hike odds fell to about 35% on CME FedWatch from about 71% a week earlier. Expected Fed moves have eased for a week; until Thursday, long yields had not followed.
• The S&P 500 rose 0.19% to 7,666.45, ending a three-day losing streak, while the Nasdaq and Dow each added 0.04%. Stocks recovered early losses as yields turned lower, but the gain was small.

October 1, 2026 Close

Why it happened

The morning report's read was mixed. It was right that the thirty-year's overnight break needed a close to count, and the close did not come. It was right that chips would hold apart from the rest of the market. ISM landed inside the 54-55.5 range it named, so that test did not resolve.

• Investors bought after a fast rise. Strategists cited fatigue after a 50-basis-point move in 18 trading days since Jackson Hole, plus positioning ahead of payrolls. That is a reason a rise pauses, not a reason it ends.
• Inflation inputs pointed the other way. Prices paid at 77.9 and Brent back near $100 after Chinese refiners suspended fuel exports beyond Hong Kong and Macau both argue for higher long yields. Yields fell anyway, which shows how much of Thursday's move was positioning.
• Chips carried US stocks while Europe fell. Micron's $32 billion in customer commitments lifted the Nikkei 3.3%, with Advantest up 9.78%. The STOXX 600 fell 1.3% to a three-month low, closer to the response the bond moves would predict.
• The Fed path kept easing, and short yields stayed put. New York Fed President Williams said on Tuesday that there is "no need for urgency" after the September hike, and October odds have roughly halved in a week. The two-year held near 4.88%, so the gap between two- and thirty-year yields is still near 73 basis points. That gap, not the Fed, is what has to shrink for the long-end pressure to be over.
• The dollar did not fall with yields. The index reached about 101.85, a year-to-date high, which kept gold's gain to about 0.5%. One reading of a dollar rising while US yields fall is demand for dollars as a haven while European stocks sold off, rather than a bet on higher US rates.

Movers

Accenture closed up about 16% at $214.84 after fiscal fourth-quarter earnings of $3.29 a share on $18.68 billion of revenue beat forecasts of $3.18 and $18.03 billion, with record large bookings. The stock is still down more than 18% this year on fears that AI shrinks consulting work.

Nike fell about 6.2% after hours to $32.96. Revenue fell 4% to $11.2 billion, Greater China fell 22%, and it guided fiscal 2027 revenue down by a high single-digit percentage. Its $1.15-$1.35 earnings guide sits well below the $1.61 consensus.

Micron rose about 3%, reversing Wednesday's after-hours dip and staying above the $1,066.10 level that the prior report said would show demand outweighing the spending worry.

McKesson rose about 4% after reaffirming its fiscal 2027 earnings guidance, one of the few defensive names to gain on a day General Mills hit a 52-week low as high yields weighed on dividend-paying consumer stocks.

United Therapeutics gained about 6% and Liquidia fell about 15% as the patent ruling carried into a second session.

What to watch

Payrolls against the thirty-year. Forecasts sit near 85,000-90,000 jobs, with unemployment at 4.1% and hourly earnings up 0.3%. Recent prints have swung widely, 162,000 in August after 21,000 in July, so a surprise in either direction is plausible. Thursday's drop came partly from positioning before the report, so a print well above 150,000 could take the thirty-year back toward 5.644% quickly. A print under 50,000 with weak wages would test 5.44%, the level that would say the rise is fading.

Whether chip strength survives higher rates. Micron's gain and the Nikkei's 3.3% rise show the AI trade is still drawing buyers while European stocks hit three-month lows. That gap lasts only while chip earnings rise faster than discount rates. A ten-year close above 5.344%, Thursday's intraday high, would test it directly. So would Micron giving back Thursday's gain and closing under $1,066.10, which would put the capital-spending worry back in front of the demand numbers.

Consumer names after Nike. Nike's guide adds to evidence that demand outside AI is weakening, with General Mills at a 52-week low on Thursday. Tesla's third-quarter deliveries on Friday, against a company-compiled consensus of 461,974, are the next read on discretionary spending. Goldman's estimate of 435,000 sits well below that consensus, and the shares have fallen about 8% in five sessions going in.

Next 5 Trading Days

Fri Oct 2 — September payrolls and Tesla deliveries. Decides whether the thirty-year returns to its 2002 high.

Mon Oct 5 — ISM services. Tests whether service prices are rising as fast as factory prices.

Tue Oct 6 — Bids due on the last 40 million barrels of emergency oil reserves. Shows how much oil supply support remains.

Wed Oct 7 — Minutes of the September 15-16 Fed meeting at 2 p.m. Shows how many officials favoured an October hike.