Treasury Yields Hold Above 5% as Oil and Bitcoin Test Market Stability

The 10-year Treasury yield started the week at 5.283%, retreating slightly from a peak not seen since 2002. This comes after softer labor-market data, including a lower-than-expected increase in nonfarm payrolls and a rising unemployment rate, failed to push yields below 5%. The U.S. deployment of another aircraft carrier to the Middle East also contributed to higher yields. The two-year Treasury yield, more sensitive to Fed policy, stood at 4.839%, exceeding the Fed's target range. Investors currently see a 20% chance of another rate hike at the October Fed meeting, with the minutes from the September meeting set to be released on Wednesday.

WTI crude oil traded near $91 per barrel after OPEC+ maintained November production targets. Brent crude ended last week above $102, with higher energy prices raising inflation concerns. This could complicate the Fed's policy outlook, as elevated oil prices are already impacting sectors like airlines. Delta Air Lines, reporting earnings this week, faces expectations of $1.88 EPS on revenue of $18.83 billion.

Bitcoin held steady above $86,000, despite the high Treasury yields offering investors a higher-yielding alternative. Demand for spot Bitcoin ETFs remained strong, with significant inflows in August and September. Meanwhile, semiconductor stocks, led by Nvidia and AMD, continued to outperform the broader market, supporting the S&P 500 near record levels. Applied Digital, a data center developer for AI workloads, is scheduled to report earnings on Wednesday.