US Markets Navigate Elevated Yields, Inflation Concerns and Fed Rate Hike Expectations

Index Update

US stocks closed mixed on Tuesday as rising Treasury yields and elevated oil prices pressured equities. The S&P 500 fell 0.2% and the Dow lost 130 points, while the Nasdaq gained 0.2%. Inflation concerns, fiscal deficits and hawkish Fed comments weighed on sentiment. Bank stocks declined, while technology shares were mixed, with gains in Meta, Oracle, Broadcom and Micron supported by optimism surrounding Anthropic’s planned IPO, potentially valued above USD 2 trillion.

Market Movers

Among the top-performing stocks of the session Stablecoin Development Corporation. surged 108.28%, while BIO-key International, Inc. rallied 85.71%. On the losing side, Digital currency X Technology Inc. fell 41.49%, while uniQure N.V. declined 37.33%, making them the weakest performers during the trading day.

Commodities Update

Crude oil rose above USD 90 a barrel and Brent approached USD 98 on Wednesday, heading for monthly gains of over 5% and 8%, respectively, as uncertainty over US–Iran talks on reopening the Strait of Hormuz supported prices. Middle East crude exports recovered to 98% of pre-war levels, aided by restored Saudi pipeline operations and Yanbu shipments. Meanwhile, US API data showed higher crude and gasoline inventories but lower distillate stocks, ahead of official EIA figures.

Gold rose to around USD 4,200 an ounce and silver steadied above USD 61 on Wednesday as falling oil prices provided support. However, elevated Treasury yields and hawkish Federal Reserve comments continued to pressure precious metals, with the US 30-year yield reaching 5.62%, its highest since June 2002, amid persistent inflation concerns. Gold and silver remained on track for September declines of nearly 6% and 8%, respectively.

Macro Updates

US Private Hiring Rebounds Above Expectations in September

US private businesses added 90K jobs in September 2026, exceeding expectations of 70K and August’s downwardly revised 36K. Hiring accelerated for the first time since May, led by education and health care (+55K) and leisure and hospitality (+22K), while financial activities (-16K) and professional and Business services (-11K) shed jobs. ADP noted that Job creation rebounded after a three-month slowdown, with pay growth remaining solid.

US Mortgage Applications Fall as Rates Reach 7.30%

US mortgage applications declined 6% in the week ended September 25, marking a fourth consecutive weekly fall, as the average 30-year fixed mortgage rate rose 18 basis points to 7.30%, its highest since November 2023. Rising Treasury yields, persistent inflation concerns and expectations of further Fed rate hikes pushed borrowing costs higher. Refinancing applications fell 8.7%, while purchase applications dropped 4.3%. Meanwhile, adjustable-rate mortgages accounted for 10.3% of applications, their highest share since October 2025, as borrowers sought lower rates.

US PCE Inflation Expected to Accelerate Monthly in August

US headline PCE prices are expected to rise 0.4% month over month in August 2026, while core prices are projected to increase 0.3%, both marking their strongest gains in three months. Annual headline and Core Inflation are forecast to remain unchanged at 3.7% and 3.3%, respectively, for a third consecutive month, keeping the Fed’s preferred inflation measure above its 2% target.

Dollar Heads for Monthly Gain on Fed Tightening Expectations

The dollar index traded near 101.4 on Wednesday, heading for a monthly gain of roughly 2%, as persistent energy-driven inflation, US economic resilience and hawkish Fed comments supported expectations of further rate hikes. Markets priced in nearly one percentage point of increases over the next 12 months, while investors awaited PCE inflation and Friday’s jobs report for further policy signals.

US Crude Inventories Rise Against Expectations

US crude inventories increased by 1.019 million barrels in the week ended September 25, against expectations of a 1.9 million-barrel draw. Gasoline stocks rose by 2.99 million barrels, while distillate inventories fell by 286,000 barrels. A further 800,000-barrel release reduced Strategic Petroleum Reserve holdings to 283.8 million barrels. Commercial crude stocks have declined by 38 million barrels over the past 24 weeks, although total US crude inventories remain nearly 13 million barrels higher year to date.

Bonds Commentary

The US 10-year Treasury Yield held near 5.23% on Wednesday, close to its highest since 2007, while the 30-year yield reached 5.62%, its highest since 2002. Persistent energy-driven inflation, economic resilience and hawkish Fed comments supported expectations of further tightening, with markets pricing in nearly one percentage point of rate increases over the next year. Investors awaited Wednesday’s PCE inflation report and Friday’s jobs data for further policy signals.

Futures Update

US stock futures edged higher on Wednesday, with the S&P 500 gaining 0.2%, Nasdaq 100 rising 0.1% and Dow adding 130 points, as investors awaited PCE and ADP data for Fed policy signals. Expectations of an October rate hike eased to 45% from 70% last Friday. Boeing rose 3.3% following a Pentagon and US Navy fighter-jet development deal, while major technology stocks also advanced. Despite Volatility from rising oil prices and Treasury yields, the S&P 500 and Nasdaq remained higher for Q3, while the Dow declined.

Following Monday's weakness, stocks lacked direction throughout Tuesday's session, with the major averages moving back and forth across the unchanged line and ending narrowly mixed. The S&P 500 (7,670.84, -0.17%) has a cautious-to-neutral tone: it opened at its session high of 7,699.60, slipped to a low of 7,653.55, and finished just under the 21-EMA (7,678.71), which is now near-term resistance. RSI has eased to 49.88, below its signal line at 50.71, suggesting momentum is flattening. For the bulls to regain control, the index needs to reclaim and hold the 7,680-7,700 area, which could open a rebound toward 7,740-7,780. If it falls below the 7,653 intraday low, the likely target is the support zone near 7,600-7,560, where the 63-EMA (7,602.16) and the mid-September swing low should offer a cushion. With Volume tapering off, choppy, range-bound trading looks most likely, with dip-buying interest near support, unless a decisive break below 7,560 turns the bias bearish. This is a technical read, not Investment advice.