Blistering Yield Rally Overshadows Trump-Xi Talks

Published as of: September 24, 2026, 9:15 a.m. ET

(Thursday market open) Dismal bond performance that sank stocks yesterday spilled into Thursday, offering no relief to investors exhausted by months of steadily rising yields. Stocks fell early as yields kept climbing, stirred by weak debt auction demand, heavy borrowing, and rising oil, among other factors.

Wednesday's September S&P Global U.S. Manufacturing PMI headline helped instigate the Treasury sell-off, topping expectations. Renewed Treasury weakness followed New York Federal Reserve Chief John Williams saying the Fed would likely need to hike again this year. Several more Fed speakers are scheduled today. Yields—which move the opposite direction of Treasuries—threaten to overshadow today's meeting between U.S. President Trump and Chinese President Xi and raise the importance of next week's heavy U.S. data schedule.

Selling hit 10 of 11 S&P 500 sectors yesterday. Market breadth stayed thin, as just 29% of S&P 500 stocks trade above their 50-day moving averages. The 10-year Treasury note yield touched 19-year highs and 30-year yields reached 22-year highs. "I think the bond market is sending a message, but I think it's saying that the economic backdrop remains relatively firm, inflation is still a concern, and interest rates may need to remain higher than investors previously expected," said Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "Global yields have risen as well, so it's not just a U.S. story."

1. Fed hike possible despite election: Though some call a follow-up October hike unlikely because of November's mid-term election, the Fed probably won't let the political calendar interfere. Back in 2022, it hiked rates just before the mid-term vote. Odds of a rate hike next month are 71% this morning, according to the CME FedWatch Tool, after Wednesday's data and hawkish words from Williams and Fed Gov. Michael Barr. Even if a Fed meeting weren't on the calendar after last week's hike, caution could mark coming weeks. Markets followed a historic pattern recently, lacking direction before the mid-term. "Markets don't really care who wins the election, they mostly care that the election is over," said Michael Townsend, managing director, legal and government affairs at Schwab, noting that markets tend to be flat leading up to an election and average a 5.7% gain in the three months after. "Markets don't like the uncertainty of elections, but once the election is over, markets can take that piece of uncertainty off the table and focus on fundamentals."
    
2. Trade on tap as Trump, Xi meet: Trade of U.S. agricultural products and Chinese low-tech consumer goods might take precedence in today's meeting between Xi and Trump over technology, with tariffs potentially eased. The U.S. effective tariff on Chinese goods is around 23%, The Wall Street Journal reported, more than triple that of other major trading partners but down from the punishing peak of 145% imposed last year. Late yesterday, Treasury Secretary Scott Bessent said the countries extended a truce by two months to keep tariffs lower and rare earth materials flowing. One topic could be U.S. liquid natural gas (LNG), where China has tariffs. Progress here could be a tailwind for energy stocks, especially those adding LNG capacity like Cheniere Energy (LNG) and Exxon Mobil (XOM), Reuters reported. Agricultural names like Deere (DE), Archer Daniels Midland (ADM), and Bunge (BG) are worth watching if farm products get discussed. The chip sector is more complex, but technology traders may want to check for any progress, even if it's glacial. Tight U.S. controls on chip technology trading with China remain in place.
    
3. Market stays rangebound, watching consumer: The broader market hasn't posted a new high since August, chopping around in a trading range between 7,600 and 7,800 for the S&P 500 Index even as crude and yields advanced. The S&P 500 managed to close slightly above 7,700 yesterday despite a disappointing session for bulls. "Market participants seem to have concluded that higher oil prices are bad, yes, but that they haven't really done anything to deter the U.S. consumer," said Nathan Peterson, director of derivatives research and strategy at SCFR. The next major milestone for the market, beyond today's meeting between Trump and Xi, is likely to be next week's flurry of key U.S. data including Personal Consumption Expenditures prices, gross domestic product, and nonfarm payrolls a week from tomorrow. Earnings from memory chip maker Micron (MU) next Wednesday also could help set direction, and next week's September ISM Manufacturing PMI^® grew in importance following Wednesday's strong S&P Global PMI data.

• Oracle (ORCL) fell 4% early as Bloomberg reported the company cited "force majeure" to potentially postpone payments if a data center it is building doesn't come online in 2028 as planned, even though it is on schedule. Blue Owl Capital (OWL), which owns the data center developer involved, fell 4%.
   
• Tech sector stocks fell yesterday and remained under pressure today, hit by climbing yields. Some losing most included Arm Holdings (ARM), down 4% and Intel (INTC) down 3%. Chips generally lost ground early. Rising yields could make borrowing more costly for tech firms involved in the AI build-out, potentially hurting profit growth.
   
• An exception to tech's slide yesterday was cybersecurity. Palo Alto Networks (PANW) and CrowdStrike (CRWD) both jumped 5% amid an uptick in AI security concerns. Software in general reversed Tuesday's declines to also buck the overall lower trend in tech Wednesday.
   
• Darden Restaurants (DRI) fell 3.6% early despite quarterly earnings coming in near Wall Street's expectations. Sales at outlets open a year or more rose for each of the firm's restaurants and the company reaffirmed prior guidance.
   
• McDonald's (MCD) fell almost 5% Wednesday as investors mulled the company's 2030 goals that target improved operating margin and market share gains. Investors seemed concerned about associated costs.
   
• Other consumer-oriented names came under rate pressure Wednesday, including airlines, retailers, resorts, and cruise lines.
   
• The Cboe Volatility Index (VIX) rose 7% Wednesday but stayed well below levels that indicate advanced market uncertainty. It rose another 6% today to top 16, still at levels that may indicate less concern about the yield surge.
   
• Yesterday's $70 billion 5-year Treasury note auction generated lackluster demand, playing into the yield rise. Today features a 7-year note auction, results of which become available by early afternoon.
   
• Weekly initial jobless claims fell to 197,000 from 202,000 the prior week, the government said today. Levels remain historically light, raising concerns that the job market might be tightening.

Next up for Treasury yields: The Fed hiked rates last week and more hikes are likely on the way. The 10-year yield is likely to generally hold in a 4.5% to 5% range, but could move above or below that at times. Risks lean to the upside, Martin wrote in his latest look at the Treasury market.

Bitcoin (BTC/USD—candlesticks) broke out of a months-long trading range in mid-August, rallying more than 30%. It surged above key resistance on Monday, and as of Wednesday afternoon sat above the average cost basis for investors in spot bitcoin ETP at round $83,000.

September 25: August durable goods orders and final September University of Michigan Consumer Sentiment.
September 28: Expected earnings from Jefferies Financial Group (JEF).
September 29: August Job Openings and Labor Turnover Survey (JOLTS) and consumer confidence for September.
September 30: ADP September employment change, August PCE prices, second quarter GDP-third estimate, and expected earnings from Micron (MU), Conagra (CAG), and Levi Strauss & Co. (LEVI).
October 1: August construction spending, September ISM Manufacturing PMI, S&P Global final September U.S. Manufacturing PMI, and expected earnings from Accenture (ACN), McCormick & Company (MKC), and Nike (NKE).