September hiring falls far short of forecasts with long-term yields just under their 2002 high

Methodology note: Morning report, generated before the October 2 US open. Sources cited inline.

September Payrolls Rose Only 29,000, Far Below Forecasts, With Long-Term Yields Just Under Their 2002 High

The economy added 29,000 jobs in September against about 90,000 expected, unemployment rose to 4.2% from 4.1%, and August was revised down to 133,000 from 162,000. The print sits below the lowest of 27 forecasts FactSet collected, 60,000. It lands with the thirty-year yield at about 5.618% before the release, 2.6 basis points under its 2002 high of 5.644%. On Thursday the two-year fell 9 basis points as October hike odds dropped, while long yields barely moved, which suggested the pressure on long bonds is not mainly about the Fed. Whether the thirty-year follows the two-year down is the test of that read. A thirty-year close above 5.644% would resume the rise; a close under 5.44% would say it is fading.

• Payrolls rose 29,000 against about 90,000 expected, unemployment rose to 4.2%, and August was revised to 133,000. The revision means the summer hiring that supported September's hike was smaller than first reported.
• FactSet's 27 forecasts ranged from 60,000 to 130,000. The print missed even the lowest of them.
• The thirty-year rose about 1 basis point to 5.618% and the ten-year held near 5.243%, while the two-year was little changed at 4.787%. Long yields are holding Thursday's levels rather than extending the pullback.
• The two-year fell 9 basis points on Thursday to just under 4.80% while the ten-year closed about 4 basis points lower. Front-end yields fell more than twice as far as long ones, so the curve steepened on the pullback.
• October hike odds stood near 35% on CME FedWatch at Thursday's close, from about 71% a week earlier. A 29,000 print argues for that decline continuing.
• Hong Kong's Hang Seng fell 2.6% to 23,972.29, its lowest since July, as traders returned from the National Day holiday, while the Nikkei lost 0.9%. Hong Kong priced a week of higher global yields in one session.

October 2, 2026 Pre-Market, Before Payrolls

What changed since last report

Thursday night's report said a payroll print under 50,000 would test 5.44% on the thirty-year; the print came in at 29,000, so that test is now live. Before the release, long yields held Thursday's pullback but did not add to it.

• The short end is doing the falling. The two-year's 9-basis-point drop against roughly 4 basis points on the ten-year tracks hike odds that have halved in a week. Long yields are held up by something the Fed path does not reach: Brent near $102, up from about $100 before China's fuel-export halt, and the government-bond selling in the UK, France and Japan that has run alongside Treasuries since September.
• Hong Kong caught up. The Hang Seng's 2.6% drop was its first session back from holiday, so it absorbed the week's rise in global yields at once. European stocks, which hit a three-month low on Thursday, opened higher, with the DAX up 0.8%.
• Stock options priced payrolls, not a wider shock. One-day VIX jumped 13.5% into the report while the 30-day VIX was almost unchanged at 16.39, so options buyers paid for one day of risk, not a longer selloff.

Movers

Nike is down 9.6% pre-market at about $31.79 after guiding fiscal 2027 revenue down by a high single-digit percentage and earnings to $1.15-$1.35 a share, against about $1.69 expected; a regular-session close below the $32.96 after-hours level would show the selling extending past the guide cut.

Synaptics is up 13.8% pre-market after onsemi switched its takeover to $123 a share in cash, about $5.7 billion, following an unsolicited rival proposal; the cash price sets the level the shares now trade against.

Bitcoin is up about 3% over 24 hours to about $86,460 at 7:25 a.m. and rising with stock futures rather than with the dollar near its 2026 high.

What to watch

The thirty-year after a weak print. The two-year should fall further on 29,000 jobs and 4.2% unemployment. If the thirty-year falls with it toward 5.44%, the long-end rise was more about the Fed than Thursday's curve suggested. If the thirty-year stays above 5.6% while the two-year drops, the gap between them widens past roughly 83 basis points, and the pressure on long bonds is coming from oil, supply and foreign bond selling rather than the Fed. A close above 5.644% on a print this weak would be the strongest sign of that.

Tesla deliveries and the consumer. The company-compiled consensus is 461,974 vehicles, down 7.1% from a year earlier, with estimates ranging from about 422,000 to 482,000. After Nike's guide and General Mills at a 52-week low on Thursday, a number near the low end would add to evidence that spending outside AI is weakening. Weak payrolls make a low number more likely to be read as a demand problem; a beat would weaken that read.

Whether Hong Kong's drop spreads. The Hang Seng's 2.6% fall happened while US futures rose, the reverse of Thursday, when US chips held up as Europe sold off. Weak jobs data cuts two ways for stocks: lower hike odds help, slower hiring hurts earnings. If the S&P 500 closes under 7,600, US stocks would be following the rest of the world rather than standing apart from it. A close above Thursday's 7,666.45 with yields under the line would keep the gap open.