Treasuries recover part of Monday's selloff as oil falls, with stocks set to open near a record

Methodology note: Morning report, generated before the October 6 US open. Sources cited inline.

Treasuries Recover Part of Monday's Selloff as Oil Falls, Putting the Thirty-Year Back Under Its 2002 High Before the First Auction

Before the open, the thirty-year Treasury yield was near 5.626%, back below the 5.644% 2002 high it closed above for the first time on Monday, and the ten-year was near 5.269%, about 4 basis points lower. The likeliest driver is oil: Brent fell from about $101 to under $99 on steady Middle East exports and the G7 reserve release. Stock futures rose with bonds, with the S&P 500 0.6% under its August record. This is a pre-market move, not a close, and three Treasury auctions follow this week. A thirty-year close above 5.644% today would say Monday's break is holding; a close under it would leave oil and the auctions to decide the next move.

• The thirty-year yield fell to 5.626% and the ten-year was at 5.269% early Tuesday, a day after the thirty-year touched 5.702%, its highest since 2002. Pre-market, the long bond has given back most of Monday's close above the 2002 high.
• Brent fell to about $98.6, more than 1% lower, as Middle East crude exports held up and G7 members began releasing reserves. Lower oil eases the inflation input that drove Monday's selling in long bonds.
• S&P 500 futures rose 0.25%, Nasdaq futures 0.40% and Dow futures 0.42%, with the S&P 500 0.6% below its mid-August peak after Monday's close. A record close today would be the first since August, made with the ten-year above 5.2%.
• October hike odds were about 22.7% on CME FedWatch on Tuesday, against about 19% on Monday morning, while the odds of a hike by year-end stood near 84%. The Fed path barely moved in either direction, so neither Monday's selling nor Tuesday's recovery came from rate expectations.
• The dollar index was near 102.16, little changed after an 18-month high of 102.53, with the euro under $1.12 on French and Spanish political risk. The currency stress from Europe has not reversed with US yields.

October 6, 2026 Pre-Market

What changed since last report

Last night's report said a thirty-year close back under 5.644% by Friday would mean Monday's break did not hold. The pre-market move has reached that level; the close has not.

• Oil reversed its inflation signal. WTI fell from a $90.05 high to about $87.56 and Brent from $100.99 to about $98.47, as Treasury Secretary Bessent said Iran loaded no crude onto tankers in September and Middle East exports kept flowing around it. Monday's long-bond selling followed service prices, and oil is the input that most quickly changes that inflation picture.
• European bonds rallied with Treasuries. The German 10-year fell more than 6 basis points to 3.454%, so the recovery is global rather than a US-specific reversal, and the French spread over Germany has not been reported narrower.
• Hormuz is not the cause. Iran's parliament speaker said on Sunday the strait will not reopen until seven conditions from the June agreement are met, so the oil decline rests on supply around the strait rather than a reopening, and a fresh incident in the Gulf could reverse it within a session.
• Stocks gained from the bond move rather than leading it. On Monday the Nasdaq set a record while long yields rose; on Tuesday futures are rising as yields fall. The leaders have now risen on both a higher and a lower discount rate in two sessions, which is consistent with earnings expectations, more than rates, carrying them into the reporting season that opens with banks on October 13.

Movers

Option Care Health rose about 24% pre-market after the FT reported McKesson and Clayton Dubilier & Rice were near a deal worth more than $5 billion including debt, which could be announced as soon as Tuesday; the stock now trades on whether talks finish.

Constellation Energy rose more than 3% after Bloomberg reported Alphabet is near a nuclear power deal worth at least $1 billion; neither company commented, and no capacity or site has been disclosed.

Corteva rose about 3.3% after JPMorgan upgraded it to overweight, calling the crop chemicals business undervalued after its seed spin-off.

Nike fell about 1.3% after Berenberg downgraded it to sell and cut its price target.

What to watch

The thirty-year at 5.644% through the three-year auction. The long bond is back under its 2002 high before the open, and the three-year note sells at 1 p.m., followed by the ten-year Wednesday and the thirty-year Thursday. A close under 5.644% with steady three-year demand would mean Monday's break did not hold; a close back above it, with oil still lower, would point to supply rather than inflation as the driver.

The S&P 500 against its August record. The index sits 0.6% under the peak with futures higher. A record close with the ten-year above 5.2% would show stocks are carrying higher long yields; a reversal from near the record on a rise in yields would mean the record still depends on bonds. An S&P 500 close under 7,666.45 would show the index following yields lower. Bank results from October 13 are the first earnings test of that record.

Fed speakers before Wednesday's minutes. New York Fed President Williams speaks at 12:05 p.m. and Governor Bowman at 1:45 p.m. ET. With October hike odds near 22.7% and year-end odds near 84%, the market has moved the next hike to December; a speaker arguing for October would test that, as would minutes on Wednesday showing several officials wanted to move sooner.