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Bond yields hit a 24-year high, and stocks shrugged

The day in one line: The US 10-year Treasury yield touched its highest level since 2002, oil rose, and stocks still ended slightly higher. Today, all eyes are on the September jobs report.

What moved and why

1. Stocks edged up despite the bond sell-off. The S&P 500 rose 14.91 points to 7,666.45 on Thursday. The Dow added 20.51 points to 50,926.56. The Nasdaq rose 10.53 points to 26,871.60. Stocks spent much of the day lower and recovered late. Futures pointed higher before Friday's open: S&P 500 and Dow futures up 0.5%, Nasdaq futures up 0.7%.

2. The 10-year yield crossed 5.3%. The US 10-year Treasury yield reached about 5.34% on Thursday, the highest since 2002. The 30-year yield hit about 5.67%. Early Friday, the 10-year had eased to about 5.22%. Why it matters: the 10-year yield sets the tone for mortgage rates and business borrowing costs. Higher oil prices are feeding worries that inflation will stay high, and the Federal Reserve raised its key rate in September for the first time in three years, to a range of 3.75% to 4.00%.

3. Oil rose Thursday, then fell back Friday. US crude (November contract) rose US$2.45 to US$92.87 a barrel on Thursday. Part of the push came from Chinese refiners suspending fuel exports for October. Overnight, US crude fell 3.7% to about US$89.47, on talk of governments releasing emergency stockpiles. Brent, the global benchmark, slipped just under US$100. For perspective, oil was around US$72 in late February. Tensions with Iran remain a factor: the US has sent 9,000 more troops to the Middle East. Elsewhere in commodities: December gold rose US$15.60 to US$4,202.30 an ounce on Thursday. US natural gas eased to about US$2.93 per million BTU Friday morning, a one-week low, on mild weather and strong production. No big moves in copper or lumber.

4. Accenture had a very good day. Shares of the consulting giant jumped about 21% after fourth-quarter results beat expectations. Revenue grew 6% to US$18.68 billion and earnings per share rose 46% to US$3.29. It expects revenue growth of 3% to 6% (in local currency) in fiscal 2027.

5. Nike did not. Nike reported first-quarter revenue of US$11.2 billion, down 4% from a year ago. Sales in Greater China fell 22%. Nike now expects full-year revenue to fall by a high-single-digit percentage. It announced a restructuring plan called "Pace" that it says will save about US$2.5 billion through fiscal 2031, and it plans layoffs. Shares were down about 10% before Friday's open. The stock was already down 44% this year before the report.

6. An 82% "drop" that isn't a loss. Corteva shares fell about 82% on Thursday. That was not a crash. Corteva spun off its seed business into a new company, Vylor, and shareholders received those new shares. The old stock price fell because part of the company now trades separately. (See "One thing to understand" for a related idea.) Also notable: Synopsys rose about 12% after announcing a US$1-billion partnership with Amazon Web Services.

Canada corner

TSX slips to a two-month low. The S&P/TSX Composite fell 81.11 points, or 0.23%, to 35,154.76 on Thursday, its lowest close since late July. Banks and miners led the decline. Royal Bank fell 0.7% and Bank of Montreal fell 0.6%. Gold miners fell even though gold rose: Barrick dropped 1.6% and Agnico Eagle 1.5%. Energy helped: Canadian Natural rose 1.7% and Suncor 1.8% as oil climbed. The TSX is down 2.6% over the past month but up about 16.6% over the past year.

The loonie weakens. The Canadian dollar closed at 70.21 US cents, down from 70.48 cents in the previous session.

Canadian bonds held up better. Canada's 10-year yield fell 0.07 percentage points to about 3.93% on Thursday. That is well below the US 10-year at over 5.2%. Canadian borrowing costs are rising too, but more slowly.

Bank of Canada: hike talk is real. The Bank's key rate is 2.25%, where it has been since October 2025. Canadian inflation hit 3.0% in August. In a speech in Halifax on September 21, Governor Tiff Macklem said the Bank does not want to be "too slow" to respond if inflation pressures become more persistent. The next rate decision is October 28.

Company watch: First Quantum. The copper miner rose 0.5% on Thursday after a 15.3% fall the day before. The drop came after a Panama government commission recommended formal talks on a new framework for the Cobre Panamá mine. Also on the TSX, Enerflex jumped about 11.9% and DPM Metals fell about 8.9%.

One thing to understand: why rising bond yields can weigh on stocks

A bond yield is the yearly return you get for lending money to a government or company. When the US 10-year yield is above 5%, an investor can earn that with very little risk. That makes stocks less attractive by comparison, because stocks carry more risk. Higher yields also raise borrowing costs for companies and households, which can slow profits and spending. That is why markets watch the 10-year yield so closely, and why it was notable that stocks still finished higher on Thursday.

On the calendar

Today (Friday, October 2)

Next week

Sources

This newsletter is general information, not investment advice.

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