Weak hiring pulls short-term yields down, but long yields rise and the Nasdaq-100 hits a record

Methodology note: Night report, generated after the October 2 US close. Sources cited inline.

Weak Hiring Pulled Short-Term Yields Down, but Long Yields Rose and Stocks Hit Records

September payrolls rose 29,000, unemployment rose to 4.2%, and October hike odds fell to about 20%. The two-year yield fell 6 basis points to 4.73%. Long yields did the opposite: the ten-year reversed an early drop toward 5.18% and closed up about 4 basis points near 5.28%, and the thirty-year rose 2 basis points to 5.629%, 1.5 basis points under its 2002 high. Stocks took the lower Fed path and ignored the long end: the Nasdaq-100 closed at a record and the S&P 500 rose 0.73%. The gap between two- and thirty-year yields widened to about 90 basis points. 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 in September, unemployment rose to 4.2%, and average hourly earnings rose 0.1%, or 3.0% from a year earlier. Weak hiring with slow wage growth removes the labour case for an October hike.
• The ten-year rose almost 5 basis points to 5.281% and the thirty-year added 2 basis points to 5.629% after both fell on the release. The reversal came on a day oil fell, so falling Fed odds are not reaching long bonds.
• October hike odds fell to about 20% on CME FedWatch from about 35% before the report. Traders still price a high chance of a December hike, so the report delayed the Fed path rather than ending it.
• The Nasdaq-100 rose 1.1% to a record 30,825 and the Russell 2000 gained 1.06%. Stocks priced the lower hike odds, not the higher ten-year.
• The G7 agreed to release up to 100 million barrels of diesel and crude over four months, front-loading diesel in the first 20 days. WTI fell 1.9% to $91.11, while Brent held near $102.

October 2, 2026 Close

Why it happened

The morning report's read held. It said a thirty-year that stayed above 5.6% while the two-year fell would mean long-bond pressure was not mainly about the Fed, and that is what happened. Its consumer read did not hold: it said a Tesla number near the low end would add to evidence of weaker spending, and Tesla beat by about 25,000 vehicles.

• The data cut the Fed path. Payrolls came in under forecasts that ranged from 84,000 to 95,000, wages rose 0.1%, and the two-year fell as far as 4.69% intraday. The BLS also revised the prior two months down by a combined 60,000, so the hiring behind September's hike was weaker than reported at the time. Short yields moved as the data said they should.
• Long yields rose without a clear trigger. The ten-year turned positive even as WTI fell 1.9%, so oil does not explain Friday's move. WTI touched a one-month low of $88.06 on the G7 news before recovering, and Brent finished flat at $102.25, so fuel prices eased less than the headline suggested. One explanation is selling after Thursday's rally; another is that investors are demanding more yield to hold long bonds regardless of the Fed. One session cannot separate the two, but the second would also explain why the gap between two- and thirty-year yields has widened from about 82 basis points at Thursday's close to about 90.
• Stocks followed the two-year. Lower hike odds lifted chips and small caps, and the VIX fell about 5% to near 15.5. Stocks are trading on the Fed path and setting aside a ten-year within a few basis points of its highest close since 2002. Europe did the same, with the DAX up 1.17%, while the Hang Seng's 2.7% fall was its first session pricing the week's yield rise.

Movers

Tesla rose about 5% after delivering 486,532 vehicles in the third quarter, about 25,000 above the 461,974 consensus though down 2.1% from a year earlier; it reports results on October 21.

Western Digital fell about 12.5%, the worst in the Russell 1000, after a Nikkei report that Toshiba will double its data-center hard-drive capacity, and Seagate fell with it; it is the first supply threat to a storage rally built on AI demand, and recovering most of the drop next week would say the market read it as a one-day headline.

Synaptics rose about 14% after onsemi raised its offer to $123 a share in cash, about $5.7 billion; the shares now trade against that cash price.

Nike fell almost 6% in its first session after guiding fiscal 2027 revenue down by a high single-digit percentage, a smaller drop than the 9.6% pre-market loss.

Broadcom rose about 3% as banks prepared a potential $60 billion financing package for AI chip infrastructure, part of a chip rally that took Nvidia to a record intraday high.

What to watch

The thirty-year against its 2002 high. At 5.629%, it is 1.5 basis points under 5.644% after trading above that level on Thursday morning without closing there. Payrolls removed the Fed as the main argument for higher long yields, and long yields rose anyway. A close above 5.644% next week would confirm the pressure is coming from outside the Fed path; a close under 5.44% would say Friday's rise was positioning.

Stocks and the ten-year. The Nasdaq-100 set a record with the ten-year near 5.28%, about 6 basis points under Thursday's intraday high of 5.344%. Chip valuations have so far absorbed higher long yields because hike odds were falling. A ten-year close above 5.344% while hike odds stay low would test that, since stocks could no longer point to the Fed. An S&P 500 close under 7,666.45, Thursday's level, would show it is being tested.

Whether the services side confirms the weak labour read. ISM services on Monday is expected near 55.7, and manufacturing prices paid hit 77.9 on Thursday. A services prices index near that level would argue the slowdown is in hiring, not in inflation, which is the mix that keeps a December hike priced. A soft prices index alongside 29,000 payrolls would weaken the case for any further hike, and would test whether the thirty-year can fall when inflation, not just hiring, softens.

Next 5 Trading Days

Mon Oct 5 — ISM services, expected near 55.7. Shows whether service prices are rising as fast as factory prices.

Tue Oct 6 — Bids due on the last 40 million barrels of US emergency reserves. Shows how much supply support remains alongside the G7 release.

Wed Oct 7 — Minutes of the September 15-16 Fed meeting at 2 p.m. Shows how many officials favoured further hikes before Friday's jobs report.

Thu Oct 8 — PepsiCo results, expected at $2.30 a share, and weekly jobless claims. Tests consumer demand after Nike.

Fri Oct 9 — Delta Air Lines results. Shows how fuel prices near $100 Brent are reaching airline costs and fares.