1. Rates & cost of capital
| Treasury | Close | Day | 5 sessions | Prior |
|---|---|---|---|---|
| 2Y | 4.79% | −5 bp | −10 bp | 4.84% |
| 5Y | 5.03% | −3 bp | −3 bp | 5.06% |
| 10Y | 5.27% | −4 bp | +1 bp | 5.31% |
| 30Y | 5.64% | −2 bp | +5 bp | 5.66% |
| 10Y real (TIPS) | 2.91% | −4 bp | 0 bp | 2.95% |
| 10Y breakeven | 2.36% | 0 bp | — | 2.36% |
| 2s10s | 48 bp | +1 bp | — | 47 bp |
The curve shifted down almost in parallel, more at the short end; the breakeven was unchanged, so the decline in the 10-year was entirely in the real yield. The $58bn 3-year auction cleared at 4.932% with a 2.62 bid-to-cover (Investrade). Pressure at the long end eased ahead of the 10- and 30-year auctions (Oct 7–8) and the FOMC minutes. Over five sessions the 2-year is 10 bp lower while the 30-year is 5 bp higher — the curve keeps steepening from the long end. The 2.91% real yield remains above the 2.75% threshold, keeping that component at −2.
2. Fed
Target range 3.75–4.00% (since Sep 17; Sep 16 decision, +25 bp). Market-implied path for the next three meetings: n/a (CME 30-Day Fed Funds settlement is blocked from the cloud, HTTP 403); the component is excluded from the scorecard. Vice Chair Bowman's Oct 6 remarks addressed regulation and supervision and did not touch monetary policy (Federal Reserve calendar). Next: FOMC minutes Oct 7 at 2:00 p.m. ET, Governor Waller on the economic outlook Oct 8 at 4:30 a.m. ET, FOMC decision Oct 28.
3. Valuation & equity risk premium
S&P 500 forward P/E 19.0 (FactSet, Sep 30 prices), below the 5-year average (19.8) and near the 10-year average (19.1); forward earnings yield 5.26%. ERP = EY − 10Y = −0.01 pp (prior −0.05); EY − real 10Y = 2.35 pp (prior 2.31). Nasdaq-100 forward P/E: n/a (no verified source). FactSet publishes its next edition on Oct 9, so the index record is not yet reflected in the P/E. The lower 10-year almost closed the negative ERP, but equities still yield in line with Treasuries with no premium — a −1 component: valuation rests on earnings growth alone.
4. Earnings
FactSet (Oct 2): expected S&P 500 earnings growth Q3 2026 +29.5%, Q4 +27.6%, CY2026 +32.4%, CY2027 +15.8%. Four-week NTM EPS revision +1.30% (forward EPS +9.3% since Jun 30 vs +7.9% in the Sep 4 edition). Q3 guidance: 44 negative, 72 positive. With 16 companies reported, 14 beat on EPS and 12 on revenue. Nasdaq-100 aggregate revisions: n/a. Revisions remain the main offset on the scorecard (+2); per TheStreet, Tuesday's advance was driven by expectations of roughly 30% earnings growth for the season.
5. Credit
FRED, as of Oct 5: HY OAS 312 bp (+2 on the day, +10 over 5 sessions, +44 over 20); IG OAS 84 bp (−1, +1, +3). FRED publishes with a lag; the Oct 6 value will follow. The 20-session HY widening keeps the component at −1, 31 bp short of the −2 threshold (+75 bp). Credit is not confirming the equity records.
6. Commodities & dollar
Oil settlement for Oct 6: n/a — sources disagree (TheStreet: WTI $87.77, −1.86%; Brent $98.67, −1.64%. Investrade: WTI $89.44, +0.01%; Brent $100.58, +0.26%). For the scorecard, EIA spot via FRED as of Sep 29: Brent $113.96, +26.97% over 20 sessions; WTI $96.16, +10.49%. DXY: n/a (no verified close; no substitute index). The Brent component (−2) reflects week-old data and, on media reports, overstates the current price gain; it stays on FRED until a verified settlement is available.
7. Macro data
| Release | Actual | Consensus | Prior | Surprise |
|---|---|---|---|---|
| Trade balance (Aug) | −$105.6bn | −$102.0bn | n/a | wider deficit |
| Redbook (week to Oct 3), y/y | +8.6% | n/a | n/a | n/a |
The deficit was the widest since March 2025 (Investrade), yet yields fell across the curve.
8. Corporate events
AVGO (+3.67%) and AMZN (+1.95%) led the NDX top 10; semiconductors outperformed. Constellation Energy (CEG, +12.30%) signed a 20-year power supply deal with Google; Marvell (MRVL, +7.14%) raised long-term revenue targets; Seagate (STX) −7.98%, Moderna (MRNA) −6.14% (TheStreet). Option Care Health (OPCH, +32.88%) on reports of a $5.8bn acquisition by McKesson and Clayton Dubilier & Rice. Indices: S&P 500 +0.58% (record), Nasdaq Composite +0.45% (record), Dow +0.49%, Russell 2000 −0.57%.
9. Week ahead (ET)
| Date | Time | Event |
|---|---|---|
| Oct 7 | 1:00 p.m. | 10-year Treasury auction, $39bn |
| Oct 7 | 2:00 p.m. | FOMC minutes (Sep 15–16 meeting) |
| Oct 8 | 4:30 a.m. | Governor Waller: economic outlook (Istanbul) |
| Oct 8 | before open | PepsiCo (PEP) |
| Oct 8 | 8:30 a.m. | Initial jobless claims |
| Oct 8 | 1:00 p.m. | 30-year Treasury auction, $22bn |
| Oct 9 | before open | Delta Air Lines (DAL) |
| Oct 9 | 10:00 a.m. | University of Michigan sentiment and inflation expectations (prelim.); weekly expiration |
| Oct 12 | — | Columbus Day: bond market closed, equities open |
| Oct 13 | — | No major releases; September CPI Oct 14 at 8:30 a.m., Beige Book Oct 14 at 2:00 p.m. |
| Component | Reading | Score |
|---|---|---|
| ERP (EY − 10Y), pp | −0.01 | −1 |
| 10Y real yield, % | 2.91 | −2 |
| 10Y change over 5 sessions, bp | +1 | 0 |
| NTM EPS revision, 4 weeks | +1.30% | +2 |
| HY OAS over 20 sessions, bp (Oct 5) | +44 | −1 |
| Fed path, next 3 meetings, bp | n/a | — |
| Brent over 20 sessions (Sep 29) | +26.97% | −2 |
| Total | −4 → Moderately Unfavorable |
What Would Change the Regime
- If the 10-year rises more than 5 bp over five sessions, then that component returns to −1 and the total to −5.
- If HY OAS widens more than 75 bp over 20 sessions, then the total falls to −5; combined with a higher 10-year, to −6 — Unfavorable.
- If a verified Brent settlement shows a 20-session change within +5% to +15%, then the oil component improves to −1.
- If the 10-year real yield falls below 2.75%, then that component improves to −1.
Sources
- U.S. Treasury — nominal and real yield curves (Oct 6, Oct 5, Sep 29)
- FRED — HY/IG OAS (BAMLH0A0HYM2, BAMLC0A0CM), Brent/WTI (DCOILBRENTEU, DCOILWTICO), fed funds target range
- FactSet Earnings Insight, Oct 2, 2026 and Sep 4, 2026 — P/E, earnings growth, revisions
- Investrade market review, Oct 6 — trade balance, 3-year auction, session wrap
- TheStreet, Oct 6 — indices, corporate events, oil
- Federal Reserve calendar; Investrade weekly calendar; FinanceCalendar
This report describes market conditions and is not investment advice.