Wall Street’s major market averages advanced on the week as Treasury yields surged while oil and gas markets continued to remain in focus. U.S. Treasury yields kept climbing this week as the 10-year Treasury yield hit 5.2%, marking its strongest reading since July 2007. Oil and gas markets remained in focus as reports surfaced that Washington and Tehran are exploring a phased arrangement to restore commercial traffic through the Strait of Hormuz. Rising oil prices fanned worries around accelerating inflation.
The latest United States Manufacturing PMI (Purchasing Managers Index) data jumped to 57.0 in September 2026, up from 53.9 in August and well above market expectations, marking a 52 month high. It tracks new orders, production output, employment levels, supplier delivery times, and inventories. A score above 50 signals economic expansion, a score below 50 indicates contraction. A combination of higher treasury yields, climbing inflation and strong PMI sets the stage for another interest rate hike in October.
For the week, the Dow added 0.28%, the S&P gained 1.21%, and the Nasdaq climbed up 2.06%.
Future Wealth’s View
The real question is why are treasury yields rising? Are they rising because the economy is strong and jobs are plentiful as the PMI suggests or are they rising because the credibility of the United States is on the line? The difference matters. If it is the former, interest rates will have to be higher to keep inflation under control and the higher rates will not slow down the economy enough to send it into a recession. If it is latter and US credibility is deteriorating because of rising debt, trade wars and erratic policies, the stock market will sell off and economy will go into a tailspin. Of course, one way or other, higher rates will eventually mean slower earnings growth. But, cash rich companies can withstand higher interest rates and still keep their capex high, lending support to the stock market.
The writing on the wall is that the bond market is lifting yields higher to slow down the economy. When the economy slows down, the stock market eventually stalls. The key for investors is to protect their portfolios as the opportunities become limited near term.
Meanwhile, as the bond market hit crisis levels, the TACO truck was back in town with Trump revoking White House access to major media networks last week for unfavorable reporting, only to be forced to reverse himself this week. But, not before blaming the “totally disloyal judge” who threw the case out – Teens call it CYA.