Good morning, it’s Wednesday, September 30, 2026. September is ending the way it started: with the bond market in charge.

Futures are roughly flat, the 10-year yield sits at 5.26%, and oil is back near $90.

The setup: This morning's inflation report could decide whether the Fed's next hike is a question or a formality.

In today's newsletter:

S&P futures sat at 7,738.50, Dow futures gained 102 points, and gold rose about 1% to $4,223. Expect volatility at 8:30.

What's moving the market: Stocks closed mostly lower Tuesday as Treasury yields hit fresh multiyear highs, with the 10-year near levels last seen in 2007 and the 30-year near a 2004 high.

TODAY’S CATALYSTS

Most important: The 8:30 PCE print. It's the Fed's preferred inflation gauge, and it lands on the last day of the quarter.

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The Fed raised rates a quarter point in September, and all but two of the 18 officials who submitted forecasts expect at least one more move this year.

Today's data probably won't change their minds. Economists expect both headline and core PCE to rise 0.3% for the month, holding annual inflation at 3.7% and 3.3%, still far above the Fed's 2% target.

Swaps traders are already pricing in close to a full percentage point of hikes over the next year, and the 10-year yield has jumped about 46 basis points in September alone.

What this means for investors: A hot core number could push the 10-year to its highest close since 2007. Small caps, REITs, and banks are most exposed. A softer reading could ease hike fears and give tech stocks and gold some relief.

A leaked IPO filing just gave Wall Street its clearest look yet at what AI costs.

Reuters reported Anthropic could list at more than $2 trillion despite a net loss of nearly $42 billion in 2025, with about $518 billion in projected infrastructure and computing costs. The listing could come as soon as November.

Why it matters: that $518 billion is revenue for someone else — chipmakers, cloud providers, and power companies. If Anthropic doesn't deliver, the companies tied to that spending could face real financial risk.

Same day, President Trump signed a voluntary AI safety accord with tech CEOs and pushed back on new regulation, calling for self-regulation instead. Chip stocks liked that.

If core PCE runs hot → more hikes get priced in; pressure on small caps, REITs, and long-duration growth stocks; better yields for savers.

If oil keeps easing on Iran diplomacy → potential relief for yields and consumers; pressure on energy producers.

If Micron guides above expectations → confirms AI spending runs into 2027; supportive for semiconductors.

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The opportunity: Intermediate and long-term Treasuries.

Why now: The 10-year closed Tuesday at 5.25% and the 30-year at 5.57%. Those are multi-decade highs.

Bull case: You lock in 5%+ government-backed income for years. If inflation cools, bond prices rise too.

Risk: ING forecasts the 10-year could reach 6%, which would mean paper losses on bonds bought today.

Watch: Whether core PCE beats 0.3%.

Right now, your bond yields are an oil trade.

BMO found the correlation between WTI crude and the 10-year yield climbed to 0.96 this month.

The administration ordered another emergency oil release amid a stalemate in U.S.-Iran talks. Qatar is still mediating the seven-month-old conflict.

Watch: Any headline out of Doha. A deal likely helps bonds more than stocks.

Money is crowding into one sector.

With one day left in September, tech is up 4.4% for the month and is the only positive sector, while financials, REITs, consumer discretionary, and materials are each down more than 6%.

That's worth watching. Leadership this narrow leaves the market more vulnerable if AI stumbles, which is why tonight's Micron report matters beyond Micron.

U.S. Treasury Yield Curve (Sept. 29, 2026 close)

Every Treasury from two years out now pays close to 5% or more. The 10-year-to-3-month spread is +108 basis points, meaning investors demand more to lend long.

For income investors, that's the most attractive setup in nearly two decades. For borrowers, it's the opposite.

Stocks start the quarter's final day steady, but bond yields are still the only variable that matters. A tame PCE print and strong Micron guidance would give the AI trade room to run.

Until inflation cools, we'd favor locking in income and keeping some dry powder.

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