🔥 Jobs Are Breaking. Stocks Are Rallying. So Why Is the 10-Year Yield Surging?
The September jobs report sent two very different messages to markets.
Payrolls increased by just 29,000, far below the 89,000 expected. Unemployment also climbed to 4.2% from 4.1%.
Suddenly, another rate hike looks much less likely.
October hike odds have fallen from above 60% a week ago to below 25%.
Normally, that’s exactly the kind of setup stocks want.
And they got it.
The Nasdaq hit a record 27,353.68, closing up 1.19%. QQQ gained 1.02%, the S&P 500 rose 0.73%, and the Dow added 0.49%.
But then the bond market delivered a very different message.
The 10-year Treasury yield jumped another 4 basis points to 5.28% — its highest level since 2002.
That’s the part I find most interesting.
📉 Weak jobs = less pressure to hike
A rapidly cooling labour market reduces the need for the Fed to keep tightening.
That should normally push yields lower and make rate-sensitive assets more attractive.
📈 But the long end isn’t cooperating
The 10-year yield is moving higher despite the sharp decline in near-term rate-hike expectations.
And it’s not just the US.
The UK 30-year gilt reached 6%.
That suggests investors are looking beyond the next Fed meeting.
The bigger question may now be inflation, government borrowing, fiscal pressure and the amount of debt the market needs to absorb.
In other words, the market may be saying:
“The Fed might stop hiking. But that doesn’t mean long-term borrowing costs are coming down.”
That distinction matters.
A lower policy rate can support stocks, but a 5%+ long-term yield can still put pressure on valuations — especially high-growth companies whose future earnings are heavily discounted back to today.
So I wouldn’t automatically read this jobs report as a clean bullish signal.
The stock market is celebrating weaker employment.
The bond market appears to be asking a different question.
If the Fed stops hiking but the 10-year stays above 5%, which market is giving us the more important signal?
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