Treasury yields took off like bottle rockets on the 4th of July Wednesday, spurred higher by Flash PMI data that came in far ahead of expectations for September.
The headline flash S&P Global US PMI Composite Output Index rose from 56.0 in August to 58.4 in September, registering the fastest expansion since July 2021 and an acceleration of growth for a fourth successive month.The S&P Global US Manufacturing PMI jumped from 53.9 in August to 57.0 in September, according to the flash reading, registering the strongest improvement in business conditions since May 2022.
The acceleration in business activity sent yields spiking higher. By the end of the day, yield on the 10-year note jumped to 5.11% a move of 15 basis points over Tuesday's level. Yield on the 30-year bond advanced 11 basis points, from 5.29% to 5.40%.
Long-dated maturities, from the two-year note to the seven-year all spiked higher by 14 to 16 basis points (0.14 to 0.16%) over the course of the day. With bond prices falling, stocks were equally out of favor as the major indices each took losses, led by the NASDAQ, which shed 1.13% after making new highs on Monday and again on Tuesday.
Exit doors at the NASDAQ and NYSE are wide open Thursday morning, with stock futures tumbling in anticipation of the opening bell. The 30-year bond yield tacked on another four basis points in early trading Thursday, sending the yield to its highest level since 2004. With bond prices reeling, investors are becoming nervous about risky stock holdings. An hour before the open, Dow futuers were off by 185 points, with NASDAQ futures falling 330 and S&P futures off 33.
Crude oil prices have been rising overnight with WTI futures above $94 and Brent futures topping $100 as Iran upped the ante in the ongoing conflict, suggesting an expansion of the war into the Indian Ocean if it is attacked again. The U.S. continues to maintain a military blockade in the region and has a major base at Diego Garcia, some 2400 miles from Iran. Expansion of the war to target U.S. Navy vessels and possibly its most important refueling base is a condition that American leaders have not anticipated. Iran's rhetoric continues to speak defiance, but neither side seems ready to back down or negotiate at this point, even though negotiators were reported to have met on the sidelines of the UN General Assembly Wednesday.
Continuation of the regional fracas appears to be counter-productive for the Trump administration which risks losing control of the House and Senate in the upcoming midterms. An end to the fighting and opening of the Strait of Hormuz would ease prices for gas at the pump and also for diesel fuel, which has hit record prices as the White House reportedly has scrapped a proposed diesel export ban.
Diesel, used widely in industry, farming, and trucking, has the potential to raise prices on just about everything that needs to be shipped, from food to household and consumer goods. According to AAA, a gallon of diesel currently costs $6.52, a 73% jump from the $3.77 price just before the war began at the end of February.
Meanwhile, gold and silver remain under pressure. Gold fell to a low of $4,244 and silver priced as low as $63.20 per troy ounce overnight.
Between the ongoing conflicts in Ukraine and the Middle East, soaring prices for food and fuel, interest rates ripping higher, bubble prices on stocks in general, and policies coming out of the White House that make little to no sense, markets are set up for a near-perfect storm.
How Wall Street and Washington try to manage to talk their way out of this mess will be a wonder to behold. The narrative that President Trump and his allies continue to promote - that America is the "hottest" nation and the economy is just all well and good - appears to be cracking under the weight of reality.
At the Close, Wednesday, September 23, 2026:
Dow: 51,511.59, -352.10 (-0.68%)
NASDAQ: 26,936.04, -308.24 (-1.13%)
S&P 500: 7,706.03, -58.61 (-0.75%)
NYSE Composite: 23,848.25, -180.82 (-0.75%)
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