Global Markets Focus on US Jobs Data as Bond Yields Surge and Middle East Tensions Grow

Friday, October 2, 2026 | Daily briefing on surging bond yields, French fiscal turmoil, Middle East tensions, and Bitcoin’s Uptober rally.

Daily Summary

Our View: Today’s sole focus is the U.S. employment report at 15:30; expectations stand at 90k with forecasts distributed between 35k and 180k, leaving wide room for a surprise. A hot print—especially in average hourly earnings—would push October hike pricing up from 25% and shove the 10-year yield back above 5.30%; if it comes in soft, yesterday’s bond recovery will extend into a second day. The primary structural risk lies in France: the yield spread with Germany is at its widest since 2012, dragging the euro to a 17-month low and fueling the dollar. Today, we expect the dollar to remain strong and the euro under pressure, oil to hold above $100 amid news of a third aircraft carrier, and bitcoin to keep testing the 90,000 direction as long as it stays above 83,300.

• U.S. 10-year yield hits a 24-year high at 5.344%. It posted this century’s largest quarterly rise in Q3 (around 90 bps). Buyers stepped in during the day, easing the yield to 5.25%; the question is whether this recovery will extend into a second day.
• A new debt crisis debate has kicked off in France. The 2027 budget failed to convince investors; the French-German 10-year spread widened past 140 bps to its widest level since 2012, and the cost of insuring French debt against default is at a 13-year high. UK 30-year yields hit 6% for the first time since 1998.
• Euro hits a 17-month low at 1.1237. The dollar index hovers at 101.9–102, its highest since April 2025, heading for its third weekly gain. The Swiss franc has regained its safe-haven status; the euro experienced its worst day against the franc since April 2025.
• The Fed took October hikes off the table. Williams said there is “no urgency,” Jefferson noted “more time may be needed,” October pricing dropped from 70% to 25%, and December is fully priced. Dallas Fed’s Logan stated at least another 50 bps is required.
• ISM manufacturing prices paid component jumped to 77.9. Survey respondents reported price increases across unexceptionally all commodities, with zero reporting declines. The economy remains in strong expansion, but inflationary pressures are worsening.
• The U.S. is deploying a third aircraft carrier to the Gulf. According to the WSJ, up to 10,000 additional troops will be in the region by November, and Trump is weighing restarting strikes after the midterm elections. China halted petroleum product exports; Brent jumped 4.4% to close at $102.31.
• Bitcoin trades at $85,900–86,600 with strong “Uptober” expectations. Inflows into ETFs reached $2.65 billion in September. Bitcoin has risen in 10 of the last 15 Octobers, averaging a 27.4% gain. Citi announced a 12-month target of $113,000.
• Today: U.S. September non-farm payrolls (expectation 90k, unemployment at 4.1%) and average hourly earnings; Eurozone preliminary inflation. China and Hong Kong are on holiday.

Story of the Day

Bond Sell-Off Spreads to Europe

On Thursday, the global bond market was hit by heavy selling pressure once again, pushing borrowing costs from the U.S. to France, Japan, and the UK to multi-decade highs. The U.S. 10-year yield touched 5.344% intraday—its highest level since 2002—having recorded the century’s largest quarterly jump in Q3 with an increase of about 90 bps. However, buyers stepped in during the late U.S. session, pulling yields back down to around 5.25%. The question posed in Reuters’ morning note is today’s core question: can bonds rally for a second consecutive day? A similar two-day recovery attempted a month ago fizzled out quickly; since late August, the trend in yields has had only one direction, and that is up. During the Asian session, yields crept back up by 2 bps to 5.2470%, meaning everything hinges on today’s employment report.

At the center of yesterday’s sell-off was Europe, marking the week’s most critical new development. The French government presented its 2027 draft budget on Thursday, but the text failed to appease investor concerns regarding the fiscal trajectory; unpopular austerity measures look difficult to push through parliament. The French 10-year yield hit its highest level since 2002, nearing the symbolic 5% threshold, and posted its worst performance since 1987 in the quarter ending September. The 10-year spread between France and Germany blew past 140 bps—its widest level since the 2012 euro zone debt crisis—whereas this spread has mostly hovered in the 50–80 bps band in recent years. The cost to insure French debt against default is at its highest since 2013. Questions are swirling over whether the ECB will step in to support the French bond market, though market players view this as unlikely for now; Bank of France Governor Emmanuel Moulin remarked last week that expecting the ECB to catch the sell-off in French bonds would be wrong. In the UK, the 30-year yield surpassed 6% for the first time since 1998 while domestic house prices grow at their slowest pace in nearly two years; in Japan, government bond yields recorded double-digit gains for an unprecedented fifth consecutive quarter.

Calculations by the Institute of International Finance (IIF) put the magnitude of the issue into perspective: advanced economies have paid over $3.3 trillion in interest on internationally traded government bonds alone over the past year. This figure surpasses the estimated $2.6 trillion global spend on artificial intelligence, the $3.1 trillion allocated to defense, and the $2.3 trillion going toward clean energy. HSBC Chief Asian Economist Fred Neumann summarizes the reason: markets are reacting to inflation running above target for years, and until monetary tightening is delivered, bond markets will demand a premium for long-term borrowing. Meanwhile, TwentyFour Asset Management’s Danny Zaid points to a dual risk: as yields rise, financial conditions tighten and the risk of a slowdown grows, yet fundamentals—namely the broader economy—still look very robust. At the same time, we know the economy is K-shaped, meaning the wealthy are doing well while lower-income segments have struggled for a long time, and relief from high oil prices is urgently needed.

Fed Takes October Off the Table

This week’s clearest policy signal came from two top Fed officials. New York Fed President John Williams stated on Tuesday that there is “no urgency” to alter the current monetary policy stance, and that “an additional upward adjustment” in the policy rate could be appropriate toward year-end. Fed Vice Chair Philip Jefferson delivered the exact same message on Thursday: future policy adjustments should be determined by carefully examining data trends, the evolving outlook, and the balance of risks; the further rise in yields across the term structure since the September meeting is a sign that investors are reassessing the macroeconomic picture, and “my colleagues and my own judgment will have to be made, which could take more time.” According to Evercore ISI analysts, Jefferson reinforced Williams’ message, and in an environment where Fed Chair Kevin Warsh has provided almost no guidance on where rates are heading, their joint message was authoritative. SGH Macro Chief U.S. Economist Tim Duy explains why: Williams needed to be unusually clear because market pricing for a rate hike was running away from the Fed.

The consequence was reflected in pricing: the probability of a hike at the October meeting dropped from 70% earlier in the week to 25%, while December is fully priced. Global brokerages now expect the Fed to hike once more this year in December rather than October. However, there is no debate regarding the direction. Dallas Fed President Lorie Logan described last month’s move as a “first step” on Thursday evening, stating that at least another half-point increase will be required to return inflation to the 2% target, and that a few additional hikes would reverse the FOMC’s risk-management cuts from last autumn. Minneapolis Fed President Neel Kashkari noted he projects one hike this year and another next year, though he had no strong view on whether October is the right time, adding that if the economy proves remarkably resilient and inflation remains stickier than expected, policy might need to go even higher. Logan also pointed out a crucial distinction: rising yields indicate investors expect additional hikes, but some models suggest part of the increase stems from a higher term premium, which could slow the economy and reduce the need for monetary tightening.

Today’s employment report serves as the test for this balance. The consensus expects 90k job creation, but forecasts are scattered between 35k and 180k, leaving a wide margin for surprises. The unemployment rate is expected to hold at 4.1% for the third consecutive month, with some analysts spotting a risk of 4.0% due to slow labor force growth and weak participation. Pepperstone Head of Research Chris Weston pointed to the primary item to watch: with the Fed now myopically focused on inflation and price pressures, a hot wage print could be particularly impactful for U.S. rates, Treasuries, and the dollar. This warning is well-founded, as Thursday’s ISM manufacturing survey showed the prices paid component jumping from 71.1 to 77.9, topping expectations of 72.3. More disturbingly, survey respondents reported price increases across unexceptionally every single commodity, with none reporting declines. The headline index printed at 54.5, indicating robust expansion, painting a picture of a “strong economy with worsening inflation pressure.”

Third Aircraft Carrier to the Gulf

The energy sector experienced sharp volatility on Thursday. The Wall Street Journal reported that the U.S. is dispatching a third aircraft carrier, the USS Theodore Roosevelt, to the Gulf to join the USS George H.W. Bush and USS George Washington. According to the report, Marine Corps vessels and up to 10,000 additional troops are also being deployed to the region, expected to arrive in November, as Trump considers restarting strikes against Iran following the midterms. Brent surged 4.4% to close at $102.31, while WTI rose 2.7% to $92.87. The second trigger came from China: Reuters reported that Chinese refiners halted petroleum product exports in October as Beijing aims to safeguard domestic inventories, heightening concerns over deepening global diesel and jet fuel shortages. The U.S. Treasury also slapped sanctions on Iran’s automotive and railway sectors and added the Russia-linked “shadow banking network” A7 Network to its list.

The pressure on the opposing side is equally notable: the Trump administration warned Germany and France to draw down their emergency diesel reserves or face potential U.S. diesel export bans. According to a source, the U.S. asked the EU to release 120 million barrels of diesel over the next six months; EU nations hold roughly 109 million tons of emergency crude and fuel stocks. KCM Trade Chief Analyst Tim Waterer summarizes the landscape in a balanced light: the market this week is weighing a distinctly mixed set of signals, where a healthier-looking Saudi export picture is offset by another U.S. aircraft carrier heading to the Gulf and China’s decision to curb refined product exports. Priyanka Sachdeva from Phillip Nova notes that the $100 level has now become a psychological and positioning threshold, with the market increasingly pricing in a world where supply chains remain fractured for longer. Brent trades this morning at $102.16–102.28, closing the week down roughly 2%, while WTI sits at $92.5–92.7, up 0.3% weekly.

Market Tour

Equities

Wall Street closed slightly higher on Thursday as yields retreated from their peaks: the S&P 500 gained 0.19% to 7,666, Nasdaq 100 added 0.31% to 30,502, the Dow rose 0.04% to 50,927, and the Russell 2000 ticked up 0.35%. KKM Financial CEO Jeff Kilburg attributed the advance to exhaustion in the bond market. On an individual stock basis, Nvidia rose 1.09% to $231 (up 2.8% weekly), Chevron gained 1.42% to $207, XOM added 0.66% to $164, while Alphabet fell 1.7% to $338 and Apple dropped 0.81% to $330. AMD sits at $616, up 34% for the month with an RSI of 67. After the bell, Nike reported a mixed quarter and announced a restructuring plan that includes layoffs starting next year; revenue in China tumbled 26%, sending the stock down 8.7% in after-hours trading. U.S. futures are positive this morning: Nasdaq is up 0.4–0.5%, and the S&P is higher by 0.3%.

Europe was heavily sold off yesterday and remains weak today: the FTSE dropped 1.68% to 10,428, the CAC fell 1.62% to 7,835 with an RSI of 25 sitting deep in oversold territory, the Euro Stoxx 50 lost 1.49% to 6,175, Italy declined 2.21% to 50,238, and the DAX slipped 1.03% to 24,939. The French budget and bond sell-off hammered the entire region. European futures are up 0.1–0.2% today. Asia is weak on Friday: MSCI Asia-Pacific ex-Japan dropped 0.3% heading for a 1.5% weekly loss; returning from holidays, Hong Kong’s Hang Seng crashed 2.76% to 23,933, plunging into a bear market. The Nikkei fell 1.01% to 68,263 but heads for a 4.2% weekly gain, and the Sensex sits at 71,910 with an RSI of 24. Mainland China is closed for holidays through next Wednesday. BIST 100 staged a sharp rebound, jumping 2.53% to 12,249; the weekly loss still stands at 5% (-12.8% monthly) with an RSI of 30. This marks the first meaningful recovery after three weeks of uninterrupted declines, though the exchange rate hit a new high at 49.14 and the trend has not yet turned.

Foreign Exchange

The dollar index trades at 101.89–102, its highest since April 2025, heading for its third consecutive weekly gain of around 1%—a streak last seen in May 2025. Its RSI stands at 75 in overbought territory. At the center of the story is the euro, trading at 1.1237–1.1260, its lowest since May 2025, with an RSI of 21 deep in oversold territory. OCBC FX Strategist Moh Siong Sim explains the mechanism: the initial spike in yields stemmed from energy prices, but this has been overshadowed by European fiscal risk concerns; the underperformance of French and Italian government bonds relative to U.S. Treasuries and German Bunds points to a flight toward the most liquid and defensive sovereign markets. He adds that dollar strength is predominantly focused against European currencies, with the Swiss franc experiencing some revival in its safe-haven status. Indeed, the euro dropped 1.3% against the franc, marking its worst day since April 2025 and erasing a significant portion of last quarter’s 2.5% gain, with the franc strengthening to 0.8278–0.8293. Prashant Newnaha from TD Securities terms this a “flight to safety” move, noting that in this scenario, the dollar index and the yen are expected to strengthen concurrently. The yen strengthened slightly to 157.64–157.84, supported by Tokyo’s core inflation printing at 2.7% year-on-year in September—its fastest pace in 10 months—bolstering the case for further BOJ hikes. Sterling sits at 1.3216–1.3220, the Australian dollar at 0.6940, the New Zealand dollar at a three-month low of 0.5618 (RSI 25), and USD/TRY hit a new peak of 49.14 with an RSI of 94.

Commodities

Oil is flat amid the conflicting signals outlined above: Brent trades at $102.16–102.28 and WTI at $92.5–92.7. On a weekly basis, Brent is down roughly 2% while WTI is up 0.3%; despite Thursday’s rally exceeding $4, the recovery in Saudi exports dominated the broader weekly trend. Precious metals are rebounding: gold rose 0.56% to $4,226, narrowing its weekly loss to 1.7% (RSI 37); silver gained 1.79% to $61.82, and platinum jumped 2.8% to $1,753, turning positive for the week. Palladium, despite a 1.98% daily gain, remains in a bear market with a 6.2% weekly loss and an RSI of 32. Copper rose 1.67% to $6.59, though momentum weakened with an RSI of 45. Natural gas was the week’s worst performer, dropping 1.72% daily to $2.92 (-11.6% weekly) and entering a bear market. In agriculture, wheat sits at 679.75 (-11% monthly) while cocoa recovered 1.25% to $5,448.

Crypto

Bitcoin started October strong, trading in the $85,900–86,600 band, up 1.8–3.1% over 24 hours and heading toward its third consecutive weekly close in the green. September’s 6.4% rally erased a large portion of the year-to-date losses, leaving bitcoin down only 1% annually. Market optimism is anchored in “Uptober”: bitcoin has risen in 10 of the last 15 Octobers, with an average gain of 27.4% and an average loss of 13%. However, last October serves as a cautionary tale; after hitting a record high early in the month, bitcoin suffered a sharp rotation amid tariff threats and AI anxieties, turning negative. Institutional demand remains robust: according to SoSoValue data, U.S. spot bitcoin ETFs hauled in $2.65 billion in net inflows in September—the second-largest monthly inflow since October 2025, down from August’s $3.52 billion but comfortably above levels seen over the past year. Ether ETFs also pulled in $832 million in September. Zeus Research analyst Dominick John notes that these flows indicate institutional demand has not waned and point to a more sustainable recovery; while a Q4 bottom appears to have formed, ongoing ETF inflows signal a more positive setup entering the final quarter of the year. The Fear & Greed Index reads 69 in the greed zone, though not at extreme levels.

On the technical front, today’s key level is $86,700–86,800: this zone houses high-leverage (25x) short liquidations that accumulated on Hyperliquid this week, and bitcoin has reached precisely that spot. What to watch now is whether prices hold above this region; holding would signal much stronger upside, whereas a sharp sell-off would imply the move was merely a liquidity sweep before targeting liquidity around $80,000. Binance also harbors 25x leveraged liquidations at $89,200, which could become the next target if a severe correction is averted. On the weekly Ichimoku indicator, bitcoin is traversing within the weekly cloud and could target the $93,000–94,000 region before retesting the bottom of the cloud; this aligns with expectations in the options market for $90,000–100,000. Unless sustained weakness below $83,300 materializes, the trend remains pointed upward. Citi released its 12-month targets this week: $113,000 for bitcoin and $3,028 for ether; the bank notes that bitcoin will outperform due to institutional accessibility and scarcity attributes, whereas ether’s valuation depends on how effectively on-chain activity converts into token demand. Among altcoins, ENA dropped 10.66% to $0.2471 as the week’s hardest loser, though its monthly gain still sits at 55%; Solana rose 1.81% to $121.67, XRP added 0.98% to $1.52, and ether held flat at $2,725.

Second Story: SEC Proposes Crypto Custody Rule, Peirce Steps Down

On Thursday, the SEC proposed a custody rule clarifying how investment advisors and regulated funds must hold client crypto assets, effectively ticking off every major headline on the crypto agenda initially laid out by Chair Paul Atkins. Atkins stated that the proposal will provide a clear regulatory framework for digital asset custody, opening a compliant path that did not previously exist for investment advisors and funds while eliminating the gray uncertainty created by custody rules designed for a bygone era. He added that existing rules only account for the custody of traditional assets, a situation that is unsustainable in the 21st century. The 760-page proposal permits advisors to self-custody client assets under strict conditions: the advisor must be unable to find a qualified custodian willing to take the assets, the firm must possess specialized expertise, and this status must be reassessed every quarter. According to an SEC official, this will likely be exceptional once the rule is implemented, though it could apply to newly issued tokens not yet supported by custodians. The proposal also permits state-chartered trusts to act as custodians and opens a 60-day public comment period.

The timing is striking. The move arrived a day before the departure of Commissioner Hester Peirce, who has led the agency’s Crypto Task Force since its inception; Peirce steps down on Friday to take up an academic post in Virginia, leaving the SEC with only two commissioners. Earlier this week, the agency voted to lower its quorum requirement: previously requiring at least three commissioners, two will now suffice, and if one of those two must recuse themselves due to a conflict of interest in a specific action, a single remaining commissioner can form a quorum. The custody rule follows the SEC’s recent rollouts of the “Innovation Exemption” regarding the tokenization of securities and the “Regulation Crypto Asset” proposal, which details how companies can raise capital using digital assets without tripping over federal regulations. With the Clarity Act stalled in the Senate, the industry’s hopes for regulatory clarity have shifted entirely to this regulatory process; the SEC’s three major steps in a single month demonstrate that Atkins’ mantra of “this administration will deliver results, with or without legislation” is being put into practice.

Levels to Watch

• U.S. Employment Report (15:30): Consensus at 90k, forecast range 35k–180k, unemployment at 4.1%. Weston flags average hourly earnings as the critical item; hot wage data directly impacts rates, Treasuries, and the dollar.
• U.S. 10-Year Yield (5.344% / 5.25%): 24-year peak and the level where yesterday’s recovery sparked. Today’s question: can bonds rally for a second day? A two-day recovery was attempted and fizzled a month ago.
• France-Germany Spread (140 bps): Widest since 2012. The ECB is seen as unlikely to step in; the widening spread continues to weigh on the euro and European equities.
• EUR/USD (1.1237): 17-month low, RSI 21. Oversold conditions technically build a base for a bounce, but a lasting recovery is difficult without resolving the fiscal risk narrative.
• Bitcoin ($86,700–86,800 / $83,300 / $89,200): Leveraged short liquidation zone, weakness threshold, and next liquidation target. Holding this region confirms upside continuation.
• Brent ($100): Sachdeva’s psychological and positioning threshold. A third aircraft carrier and China’s export halt push prices higher, while Saudi recovery and EU stock pressure pull them lower.

Weekly Calendar

Date	Day	Event
Oct 2	Friday	U.S. Sept non-farm payrolls (exp 90k, unemployment 4.1%) & average hourly earnings; Eurozone preliminary Sept inflation; Bitget reopens remaining crypto, fiat, and P2P withdrawals
Oct 4	Sunday	OPEC+ meeting (November production targets expected to remain unchanged)
Oct 6	Tuesday	Ethereum Glamsterdam public testnet (Sepolia)
Oct 7	Wednesday	Mainland China markets reopen
Oct 8	Thursday	U.S. weekly jobless claims
Oct 27–28	Tue–Wed	FOMC (hike probability 25%; December fully priced)
Nov 3	Tuesday	U.S. midterm elections; WSJ reports Trump is weighing post-election strikes against Iran; Nov 22: Trump memecoin investor dinner