The 10-year Treasury yield closed at 5.10% Wednesday, up 13 basis points. It last sat this high in June 2007, before the financial crisis and a decade of quantitative easing.
One PMI report did it in a single session. Most of yesterday's other moves run through that number.
THE TRIGGER
S&P Global's flash composite PMI jumped to 58.4 from 56.0, its strongest reading since July 2021. Manufacturing hit 56.7, its fastest pace since April 2022.
The bond market reacted to the details underneath. Input costs rose at their fastest rate since October 2022.
That puts inflation back into the growth story one week after the Fed hiked to 3.75%-4.00% on Sept. 16. CME FedWatch odds of an October hike reached about 70%, up from 55% a day earlier.
THE FRONT END
The 2-year rose 13 basis points to 4.90%, its highest since May 2024. A move that size at the short end is consistent with traders repricing Fed policy.
The 30-year added only 9 basis points to 5.39%, so the front end did most of the work. The 7-year now yields 5.04%, against 4.51% at last month's auction.
STOCKS
The S&P 500 fell 0.8% to 7,706.03. The Nasdaq lost 1.1% to 26,936.04, and the Russell 2000 dropped 1.8%, the steepest decline of the majors.
Breadth is what the index level hides. More than 51% of S&P 500 stocks now trade below their 200-day average, the weakest reading since early April.
Utilities fell 1.6%, which is the rate-sensitive corner reacting directly to the 10-year. A market that narrow has less cushion if yields push higher today.
OIL AND GOLD
WTI rose 2.4% to $92.69. Brent settled at $102.03, up $2.76 and roughly 50% above a year ago, ending a five-day losing streak.
Fuel is the same cost line that pushed the PMI's input prices higher. Crude and the 10-year are now reading off the same page.
Gold fell 1.9% to $4,283.31. The 10-year TIPS real yield near 2.65%, raises the cost of holding a metal that pays nothing, so gold's direction today depends on yields.
THE DAY AHEAD
Richmond Fed President Thomas Barkin speaks at 8:00 a.m. ET, after New York Fed President John Williams earlier this morning. They are the first Fed voices since the PMI.
Jobless claims arrive at 8:30 a.m. ET, with consensus at 201,000 against 196,000 prior. A print under 200,000 would add labor strength to yesterday's growth signal and leave the 2-year exposed.
New home sales follow at 10:00 a.m. ET, expected at 615,000 against 607,000 prior. Mortgage rates above 7%, make this the first housing read at the new yield level.
The 7-year auction at 1:00 p.m. ET is the day's direct test of demand at 5%. A weak bid would land on a curve that has already moved 14 basis points in a day.
