Friday’s soft jobs report did the Federal Reserve a favour. It did very little for the bond market. Traders have largely stopped worrying about a rate rise this month, yet the US 10-year yield is sitting around 5.28%, close to its highest in years, and that is the weight Wall Street carries into Monday’s cash open.
US stock futures are a touch lower after Friday’s record finish for the Nasdaq. Nothing dramatic: S&P 500 futures are down a little under 0.2% and Nasdaq 100 futures about 0.25%, according to Reuters. It looks less like a change of heart and more like a market catching its breath while it decides whether cheaper money is really on the way.
The Situation Right Now
The picture into the New York open is a market that likes the Fed story but does not fully trust it. CME FedWatch now shows around an 80% chance the Fed holds rates this month, a big shift since September’s payrolls came in at just 29,000 against expectations of roughly 90,000, with the jobless rate up to 4.2%. A December rise is still largely priced, so the relief has limits.
Meanwhile, Treasury yields have refused to celebrate. The 10-year has spent the session between roughly 5.25% and 5.29%, and the 30-year is near 5.64%. Investors are still demanding a hefty premium to hold long-dated US debt, with heavy government borrowing and energy costs keeping that premium sticky. When the risk-free rate is that high, every share price has to work harder to justify itself.
What Changed Since This Morning?
This morning’s brief was about cooler US jobs and French political strain pushing the euro lower. Since then, Europe’s worry list has grown. Spain’s prime minister Pedro Sánchez has called a snap election, and the euro touched a 17-month low against the dollar near 1.1162 before steadying around 1.12. The CAC 40 has slipped to a six-month low.
Oil has also firmed up a little. WTI has climbed back above $90 to around $90.80, while Brent is up about 0.7% near $103 after reports of another tanker being hit near the Strait of Hormuz. Saudi Aramco’s chief added to the nerves by saying it could take two years to rebuild global oil stockpiles. And yields have drifted higher rather than lower through the European session, which is the opposite of what a dovish Fed story would normally deliver.
The Biggest US Market Story
The real contest today is between two forces. On one side, softer jobs data has taken a Fed rise off the table for October, which helped push the Nasdaq to a record on Friday. On the other, the bond market is telling equity investors that money is not getting cheaper any time soon. Stocks have been remarkably resilient through all of this, but resilience at a 5.28% 10-year yield leaves less room for disappointment.
Not everyone is relaxed. Broker Panmure Liberum has warned the equity bull market may be nearing its end and forecast the S&P 500 could fall more than 35% by the end of 2027. That is a bold outlier, not the consensus, but it shows how quickly the conversation turns once yields stay this high.
Stocks Moving Before The Bell
The standout is PTC, the Boston industrial software group, up around 34% before the open after France’s Schneider Electric agreed to buy it for $205 a share in cash, valuing the equity at about $22.6 billion. That is a 42% premium, and a reminder that strategic buyers still pay up for industrial software and AI capability. Schneider’s own shares fell more than 8% in Paris as investors weighed the debt and new equity needed to fund it. Autodesk is firmer in sympathy.
Intel is down about 4% after Elon Musk confirmed talks with TSMC over his Terafab chip project, raising questions about Intel’s role. Nvidia is slightly higher after touching a record on Friday, while Cerebras is up more than 6% after OpenAI’s Sam Altman called it a close partner. The chip sector is mixed rather than broken, which fits a market taking a breather.
FX and the Dollar
The dollar is firm, but mostly because Europe is giving it a hand. The dollar index is up about 0.3% near 102.2, with the euro doing much of the heavy lifting on French and Spanish political worries. Sterling is a little softer near $1.322, holding up better than the euro, and the yen is steady near 158 to the dollar. A firm dollar alongside fading Fed hike odds tells you this move is about the rest of the world as much as about America.
Bonds
Bonds are the story beneath the story. The 10-year near 5.28% and the 30-year near 5.64% keep borrowing costs high for companies, homeowners and governments alike. Goldman Sachs’ Gutman has told governments to cut spending if they want to curb runaway borrowing costs, and the debate over fiscal discipline is now running on both sides of the Atlantic. Until long-dated yields ease, any rally in shares is working uphill.
Commodities
Gold is up about 0.6% near $4,186, just shy of $4,200, and silver has jumped more than 2.5%. Precious metals are getting support from the fading Fed hike odds even with yields high. In energy, Brent above $100 remains a headwind for inflation hopes, while WTI holding near $91 suggests US supply worries are calmer than those in the Gulf.
Today’s Remaining Catalysts
The US cash open is at 14:30 UK time. The final S&P Global services PMI follows at 14:45, then the bigger number, the ISM services survey, at 15:00 UK. Economists expect it to stay in the mid-50s, signalling steady growth. A strong reading would test the idea that the economy is cooling enough to keep the Fed on hold, and could push yields higher again. A weak one would back up Friday’s jobs signal.
Later in the week, Fed Governor Christopher Waller speaks at the Istanbul Economic Forum, and PepsiCo, Delta Air Lines and Levi Strauss report results ahead of the main third-quarter earnings season in mid-October.
Levels Traders Are Watching
For the S&P 500, Friday’s close near 7,723 is the first reference, with futures trading near 7,762. On the Nasdaq, the question is whether Friday’s record high holds as chip stocks cool. In bonds, the 10-year range between 5.25% and 5.29% today is the line to watch, and a break above it would likely weigh on growth stocks. In currencies, the euro’s 17-month low near 1.1162 and the dollar index near 102.5 matter. For commodities, Brent around $100 and gold near $4,200 are the round numbers in play.
Where That Leaves Us Into The Bell
Our read is that the bias into the open is cautious rather than bearish. The Fed has bought the market some time, but the bond market has not handed back the pressure, and that tug of war usually means choppy trading rather than a clean trend. The evidence is in the detail: futures dipping only slightly, yields stuck near multi-year highs, the dollar firm on European politics and big individual stories such as PTC driving the action.
The opportunities are likely to be in single names and sector moves rather than in the index as a whole, while the main risks are a hot ISM services reading that revives rate worries, or a fresh oil scare from the Gulf. What would change the view is a decisive move in the 10-year yield: a drop back towards 5.20% would give equities room to rally, while a push through 5.30% would put Friday’s record under pressure. Markets to watch are the 10-year Treasury, Nasdaq 100 futures, EUR/USD and Brent.
For beginners, the lesson is simple: a dovish central bank does not always mean cheaper money if the bond market disagrees, and yields often matter more for shares than the headline rate decision. This is an educational view of the market, not advice to buy or sell anything.
If you want to understand how you would handle a session like this, where the news looks good but the bond market is not convinced, the free Samuel & Co Trading trader assessment is a useful place to test your own approach.
