What Happened
TREE NEWS reports: US nonfarm payrolls for September rose by just 29,000, far below the roughly 90,000 expected, while August’s gain was revised down to 133,000 from 162,000. The unemployment rate climbed to 4.2% and average hourly earnings slowed to 3.0% year-over-year. Markets trimmed the odds of an October Federal Reserve rate hike to about 20–21% from roughly 26% before the release.
Equities rallied on the softening rate outlook, with the Nasdaq up more than 1% and Nvidia touching a record intraday high. Treasury yields initially fell sharply, then staged a V-shaped reversal and turned higher. Separately, the G7 announced a coordinated release of 100 million barrels of oil and petroleum products through the International Energy Agency over four months, sending crude sharply lower.
Market Implications
Equities
US stocks closed higher Friday but the weekly picture was mixed: the Nasdaq gained 0.45% for a third straight weekly advance, while the S&P 500 slipped 0.27% and the Dow fell 1.26%. Technology was the best-performing major sector, while financials and healthcare lagged, with the KBW Bank Index down 2.78% on the week. Nvidia’s intraday market value approached $6 trillion. Memory-chip names were hit after reports that Toshiba plans to double hard-disk drive capacity for AI data centers by fiscal 2027, with Seagate and Western Digital each down about 10.2%. Tesla rose about 4.7% after third-quarter deliveries of 486,500 units beat estimates by roughly 5% despite a 2.1% year-over-year decline. Nike was the worst Dow component, falling more than 3.6% after a 26% drop in China sales and weak guidance.
Bonds
The 10-year Treasury yield briefly touched a session low below 5.16% after the payrolls report, then rebounded more than 10 basis points to around 5.30%, near Thursday’s 2002 high of 5.34%. The 2-year yield briefly dipped to 4.70% before recovering to about 4.85%. For the week, the 10-year rose roughly 12 basis points for a fifth consecutive weekly gain, while the 2-year fell about 3 basis points, ending a six-week streak. In Europe, the French-German 10-year spread widened past 140 basis points to as much as 150, the widest since the 2012 euro crisis, as investors focused on France’s fiscal position.
Currencies and Crypto
The dollar index fell more than 0.4% to 101.67, retreating from a 2025 high above 102.20, though it still posted a third straight weekly gain. The yen strengthened past 157 per dollar, the euro rose to 1.1286, and offshore yuan briefly approached 6.70. Bitcoin touched above $87,100 before reversing to below $84,000, ending roughly flat over 24 hours and up about 0.5% on the week.
Commodities
WTI crude fell 1.90% to $91.11 a barrel and Brent slipped to $102.25 after the G7 reserve release, though Brent still gained 4.94% for the week on Middle East supply risk. Gold fell 0.94% to $4,133.70 an ounce, down 3.59% for the week — its worst weekly drop since early June — while silver slid 1.23% to $59.977, down 6.68% on the week. Copper edged up 0.15% to $6.492 a pound but lost 3.1% for the week.
Key Takeaways for Investors
- A cooling labor market is not enough to fully remove the risk of another Fed hike, given energy-driven inflation, fiscal deficits and heavy Treasury supply.
- The divergence between short- and long-dated yields signals easing near-term policy bets but persistent long-term inflation and term-premium concerns.
- AI-linked technology remains the dominant equity theme, but concentration risk is rising as non-AI S&P 500 constituents lagged.
- Energy markets are increasingly driven by refined-product supply and geopolitics, not just crude volumes; the G7 release targets diesel in particular.
- Precious metals remain pressured by a firm dollar and elevated long-end yields.
