1. Rates & cost of capital
UST 2Y 4.83% (+5 bp d/d, +2 bp over 5 sessions), 5Y 5.06% (+5 bp, +8 bp), 10Y 5.28% (+4 bp, +11 bp), 30Y 5.63% (+2 bp, +14 bp). 10Y real 2.92% (+4 bp, +9 bp), 10Y breakeven 2.36% (unchanged), 2s10s 45 bp (prior 46). According to Newsquawk, yields fell after payrolls, then reversed and settled higher. A weak labor print could not pull rates lower: the entire daily rise in the 10Y was real yield. The market wants evidence of sustained labor-market and inflation softening before pushing yields down; pressure on long-duration assets persists, even though the session's equity rally ignored it.
2. Fed
Target range 3.75-4.00% after a 25 bp hike on Sep 16. The three-meeting rate path from fed funds futures settlement is n/a (CME data unavailable from the cloud), so the component is excluded. Per Newsquawk (secondary source; not scored): 5.7 bp priced for October (prior 6), 25.9 bp cumulative by December (prior 24.8). Per Yahoo Finance, the probability of an Oct 28 hike after payrolls was 16%. Logan (Dallas Fed, 2026 voter): the policy rate needs to rise "an additional 50bps or more"; policy is "not sufficiently restrictive." Goolsbee: the labor market is steady, inflation is the priority, open to any decision. The market moved the next hike from October to December rather than abandoning it — year-end pricing actually rose. Next test: the FOMC minutes on Oct 7.
3. Valuation & equity risk premium
S&P 500 forward P/E 19.0 (FactSet, Oct 2 edition, as of the Sep 30 close; 5-yr avg 19.8, 10-yr avg 19.1; 20.4 on June 30), forward earnings yield 5.26%. ERP (EY − 10Y) -0.02 pp (prior -0.03); EY − real 10Y +2.34 pp. Nasdaq-100 forward P/E: n/a. The multiple fell from 19.2 to 19.0 as earnings outpaced price, nearly offsetting the higher 10Y: ERP is 2 bp from neutral. Since June 30 the index is up 2.0% while forward EPS is up 9.3%.
4. Earnings
FactSet (Oct 2 edition) expects S&P 500 EPS growth of 29.5% in Q3 (prior edition 29.1%; June 30: 26.7%), 27.6% in Q4 (26.8%), 32.4% for CY2026 (32.0%) and 15.8% for CY2027 (15.4%). Forward 12-month EPS is up 9.3% since June 30 vs 7.9% in the Sep 4 edition — a four-week revision of +1.30%. Q3 guidance: 44 negative, 72 positive. 16 companies have reported: 14 beat on EPS, 12 on revenue. Nasdaq-100 aggregate revisions: n/a. Estimates are rising during the quarter, against the historical pattern of in-quarter cuts; the revisions component holds at +2 ahead of Q3 reporting season.
5. Credit
HY OAS 324 bp, IG OAS 86 bp (FRED, latest Oct 1). HY +12 bp on the day, +44 bp over 5 sessions and +58 bp over 20; IG +2 bp, +7 bp and +5 bp. The equity–credit divergence is widening: the Nasdaq is at a record while high-yield spreads are 58 bp wider over a month.
6. Commodities & dollar
Session settlements for Brent and WTI are n/a. Media reports (unverified): WTI $91.11 (-$1.76), Brent $102.25 (-$0.06) — Investrade, Newsquawk; the G7 confirmed a release of up to 100mn barrels of oil and diesel over four months. The scorecard uses EIA spot via FRED, dated Sep 29 (not updated since): Brent $113.96, +26.97% over 20 sessions; WTI $96.16 (+10.49%). DXY: n/a. The G7 release capped oil after the Oct 1 spike; the oil component stays at -2 until FRED updates the spot price.
7. Macro data
| Release | Actual | Consensus | Prior |
|---|---|---|---|
| Nonfarm payrolls (Sep) | +29k | +90k | +133k\* |
| Unemployment rate | 4.2% | 4.1% | 4.1% |
| Average hourly earnings, y/y | 3.0% | 3.1% | 3.1% |
| Participation rate | 61.8% | — | 61.6% |
| Factory orders (Aug), m/m | +0.1% | +0.1% | — |
\* August revised to +133k from +162k; net two-month revision -60k. Wage growth of 3.0% y/y is the lowest since May 2021. Sources: Investrade, Newsquawk. A weak report with downward revisions and slowing wages argues against an October hike, but inflation data (ISM prices at 77.9 a day earlier) do not yet allow the Fed to end the cycle.
8. Corporate events
S&P 500 +0.73% (7,722.72), Nasdaq-100 +1.00% (30,807.93), Nasdaq Composite +1.19% (27,190.86, intraday record), Dow +0.49%, Russell 2000 +0.94% (Yahoo Finance, Investrade). For the week: S&P 500 -0.3%, Dow -1.3%, Nasdaq +0.5% (Investrade). All S&P 500 sectors rose, led by Consumer Discretionary (+1.38%) and Materials (+0.98%) (Newsquawk). NDX top 10: SPCX +7.35%, TSLA +4.65%, AVGO +3.35%, GOOGL +1.56%, NVDA +1.34%, AMZN +1.33%, AAPL +1.02%, MSFT +0.92%, META +0.30%. Tesla delivered 486,532 vehicles in Q3, above estimates; NVDA set an intraday record ($237.87). Rivian reported record deliveries of 19,248. Nike (reported Oct 1 after the close): FQ1 revenue below estimates, guidance for a sales decline.
9. Fundamental scorecard
| Component | Reading | Score |
|---|---|---|
| ERP (EY − 10Y), pp | -0.02 | -1 |
| 10Y real yield, % | 2.92 | -2 |
| 10Y change, 5 sessions, bp | +11 | -1 |
| NTM EPS revision, 4 weeks, % | +1.30 | +2 |
| HY OAS, 20 sessions, bp (as of Oct 1) | +58 | -1 |
| Fed pricing, next 3 meetings, bp | n/a | excluded |
| Brent, 20 sessions, % (EIA spot, as of Sep 29) | +26.97 | -2 |
| Total (6 of 7 components) | -5 → Moderately Unfavorable |
The total is unchanged, but the buffer narrowed on both sides: the 20-session HY OAS change (+58 bp) is approaching the -2 threshold (+75 bp), and ERP (-0.02) is approaching neutral.
10. Week ahead (ET)
| Date | Time | Event |
|---|---|---|
| Oct 5 | 10:00 | ISM Services (Sep) |
| Oct 6 | — | n/a (not confirmed) |
| Oct 7 | 14:00 | FOMC minutes (Sep 15–16 meeting) |
| Oct 8 | — | n/a (not confirmed) |
| Oct 9 | 10:00 | University of Michigan sentiment (prelim.); weekly expiry |
| Oct 16 | — | Monthly OPEX |
| Oct 28 | 14:00 | FOMC decision |
11. What Would Change the Regime
- If the 10Y closes at or below 5.26% (ERP non-negative), then the ERP component improves to 0 and the total to -4.
- If the 20-session change in HY OAS exceeds +75 bp (now +58 bp), then the credit component falls to -2 and the total to -6 — Unfavorable.
- If the five-session rise in the 10Y exceeds +20 bp (now +11 bp), then the rates-change component falls to -2 and the total to -6.
- If FRED updates EIA spot and the 20-session Brent change is within +15%, then the oil component improves to -1 and the total to -4.
Sources
- U.S. Treasury — daily par nominal and real yield curves
- FRED — ICE BofA HY and IG OAS, Fed target range, EIA Brent and WTI spot
- FactSet Earnings Insight, Oct 2 and Sep 4, 2026
- Investrade Market Review, Oct 2, 2026
- Newsquawk US Market Wrap, Oct 2, 2026
- Yahoo Finance, Oct 2, 2026
- LiteFinance weekly economic calendar
Model-based estimates (gamma exposure, dealer positioning) are labeled as such and are not observed positions. This report describes market conditions and is not investment advice.