Bonds fell broadly in the third quarter of 2026 as inflation worries, government deficit concerns and the Federal Reserve's September rate hike pushed yields higher, while US stocks gained about 1%. The Fed raised its federal-funds target rate by 0.25 percentage points in September, its first hike since 2023, and the ECB, Bank of Japan and Reserve Bank of Australia each raised rates by 25 basis points. Morningstar says the 10-year real yield rose to 2.93%, driving most of the increase, while the 10-year breakeven inflation rate ended September at 2.36%, suggesting investors are not bracing for runaway inflation. Mortgage rates passed 7.25% and municipal bonds had their worst month since 2008. In 2026 through September, US stocks gained about 12%, energy rose nearly 40%, utilities and industrials fell about 12%, and small-caps lost 5.6%.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on morningstar.com ↗
Keywords
bondsFedinterest ratesinflation
Open a keyword to see other news on the same topic.
Related tickers and likely impact
SPY
• NeutralSPDR S&P 500 ETF
Relevance: low
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 10/22/2026 | 763.96 |
| Change that session | -1.18% |
DXY
• NeutralRelevance: low
| Market | Currencies |
|---|---|
| Close on 10/22/2026 | 101.62 |
| Change that session | -0.07% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- The Growth Docket Vol . I , No . 3 – The Price Of Money , The Value Of Growth
The 10-year US Treasury yield hit 5.23 percent on Friday, its highest since 2007, and the 30-year rate reached 5.49 percent, the highest since 2004. The article attributes higher rates to four forces: the conflict with Iran pushing up oil and inflation, AI data center spending estimated at $1.37 trillion this year and largely borrowed, tariffs adding about half a point to inflation, and a shrinking workforce as net immigration slowed. The federal deficit of about $2 trillion a year means more government borrowing. The extra yield on high-yield corporate bonds over government debt is 2.8 percentage points, below its ten-year average, but higher base rates mean buyers pay more to borrow and expect less when they sell. Markets put roughly a two-in-three chance on the Fed raising rates again on October 27 and 28.
- Fed Minutes Show Another Rate Hike Is Likely This Year as Kevin Warsh FOMC Battles Persistent Inflation . Here Why That Signal Matters for Stocks and Bonds Heading Into Year - End .
Minutes released on October 7 show that Kevin Warsh and other FOMC members expect another rate hike in 2026 to fight persistent inflation, with meetings on October 28 and December 9 as key decision points. The September CPI rose 3.7% year over year, and after its September hike, the Fed may lift rates by another 0.25% or 0.5% by year-end. Higher rates typically weigh on stocks through higher borrowing costs, but Vanguard research suggests rates may need to rise at least 1 percentage point before stock markets suffer significant negative effects. The article recalls that in 2022, when the Fed hiked aggressively, the S&P 500 fell about 19% and the Nasdaq-100 fell about 33%. Since bond prices fall when yields rise, bonds may look more attractive than they have in recent years.
- Fed Minutes Show Another Rate Hike Is Likely This Year as Kevin Warsh FOMC Battles Persistent Inflation . Here Why That Signal Matters for Stocks and Bonds Heading Into Year - End .
Minutes from the latest Federal Open Market Committee (FOMC) meeting, released Oct. 7, indicate Kevin Warsh and fellow policymakers are considering another rate hike in 2026. Inflation remains sticky, with CPI up 3.7% year over year in September 2026, so after September's increase the Fed may raise rates again before year-end, by a small or moderate amount. The article explains that higher rates raise borrowing costs, which can curb consumer spending and business investment and typically weigh on stocks. It argues the current tightening appears smaller than in 2022, when the S&P 500 fell about 19% and the Nasdaq-100 about 33%, so investors should be cautious but not panicked. For bonds, rising rates typically push yields up and prices down, which can make bonds more attractive when U.S. government yields reach 5% or higher.
- Global inflation is rising again and central banks are behind the curve
Charlie Bilello warned on October 17 that global inflation is accelerating while the Fed, ECB, BOJ and BOE remain behind the curve, pointing to more rate hikes ahead. The article notes that a synchronized tightening would pressure stocks and bonds at once, since the usual bond cushion compresses when equities fall. The KBW Bank Index has dropped for six consecutive weeks, down 11%, its longest streak since the 2008 financial crisis. In the US, the FY2026 deficit reached $1.99 trillion, up 12%, with spending at $7.4 trillion and net interest at $1.36 trillion. Other items include Amazon deploying over 1 million robots while it has about 1.5 million human workers, and Nvidia CEO Jensen Huang saying classical computing makes up roughly a third of its business and is growing 30% to 40% a year.
- Breitbart Business Digest: Inflation Takes Flight, and AI Debt Hits Turbulence
The weekly wrap says US consumer prices rose 0.6% in the month, or 8.1% annualized and 3.7% over the past year, while producer prices rose 1.3% for the month and 6.3% over 12 months; import prices rose 1.1%. Fed official Kevin Warsh spoke at an IMF meeting in Bangkok without giving guidance on monetary policy, but markets still read his remarks as confirming expectations. Before his speech, fed funds futures priced around a 72% chance of a hold this month and a 90% chance of a hike in December; afterward, the odds of a hold in October rose above 85%. The article also says bond markets grew worried about the sustainability of AI-related debt in a higher-rate environment, and argues an unexpected October hike is more likely than many think.
- The Odds of a Rate Hike Just Doubled
September's CPI report showed inflation heating up again: headline CPI rose 0.6% for the month and 3.7% annually, above the 3.6% expected, while core CPI rose 2.6% over the past year. Gasoline jumped 9.1% in September alone, accounting for about half of the headline increase, and inflation is spreading to shelter, vehicles, apparel and computers, which are up nearly 10% amid AI-driven demand for chips and hardware. Wages grew just 3% over the past year. According to CME Group's FedWatch Tool, the odds of a Fed rate hike in October rose from 22% to 49%, and traders now see a 94% chance of at least one more hike by year-end. Wall Street fell, with the Nasdaq down more than 1%, the 10-year Treasury yield rising to 5.27%, and gold and metals selling off.
Related markets
Latest news
- Why Hilltop Holdings Stock Slumped Today
Hilltop Holdings reported quarterly total revenue just under $310 million, down 6% year over year, and GAAP net income down 46% to $24.9 million, or $0.44 per share, both well short of analyst consensus of just under $320 million and $0.64 EPS. The company called the quarter “volatile” and cited the Federal Reserve’s recent rate hike and the broader rate environment. It declared a quarterly dividend of $0.22 per share, matching the prior one, and spent $20 million on buybacks, with about $86 million left under its authorization through year-end. The shares closed down nearly 3% on Thursday, and the article flagged clear weakness at the HilltopSecurities broker-dealer and PrimeLending mortgage units.
- S&P 500, Dow Drop As Elevated Oil Prices Stoke Inflation Fears Ahead Of Fed Meeting Next Week — AAPL, AXP, CART, UBER In Focus
The S&P 500 fell 0.5% and the Dow Jones Industrial Average dropped 1.2% on Friday as oil prices surged amid resurfacing geopolitical concerns, raising inflation and rate-hike worries ahead of the Federal Reserve's meeting next week. West Texas Intermediate rose 3.8% to $103.27 a barrel and Brent gained 3.1% to $116.72, its highest settlement since April, after reports the U.S. and Israel could be preparing fresh strikes on Iran. Market participants were betting on a 91% probability that the Fed will leave rates unchanged. Tech stocks retreated as investors weighed how surging corporate debt and elevated interest rates might affect AI-focused companies, while the Nasdaq 100 was flat. Elsewhere, Instacart (CART) is exploring a potential sale, American Express plans to cut about 5% of its global workforce, and Apple hit record highs after selling out its limited in-store iPhone Duo inventory.
- Neoclouds secure record funds as Nvidia’s Huang says more investment required
Venture investors put $6.6 billion into 58 AI neocloud deals so far this year, according to PitchBook data, more money and deals than any prior year and 51% above last year’s total of $4.4 billion. Neoclouds are companies that sell remote access to GPUs for AI workloads. In an interview with CNBC, Nvidia CEO Jensen Huang said demand for neoclouds is “off the chart” and that more investment is still needed.
- Moody's holds steady on France's credit rating as country grapples with turmoil and higher yields
Moody's kept its credit rating on France at Aa3, which it still considers "high grade," but maintained the negative outlook on the country. The decision came as France, the euro zone's second-largest economy, faced a week of civil unrest and rising political risk. France's 10-year bond yield surpassed 5% this week for the first time since 2002, and investors had been awaiting the rating decision.
- What Is Super Micro Computer (SMCI) Telling The Market With Its New AI Rack?
Super Micro Computer (NasdaqGS: SMCI) introduced its NVIDIA Vera CPU rack, a dense liquid-cooled agentic AI platform for large-scale reinforcement learning that supports up to 22,500 agent sandboxes per rack. The company also launched a Nokia partnership to pair Vera-based gear with AI-RAN edge solutions for telecom operators, and a Nutanix collaboration on integrated rack-scale private AI inference stacks. According to the article, the launch pushes Super Micro deeper into full AI factory builds rather than GPU servers alone. The company upgraded its fiscal Q1 2027 revenue guidance to US$18.5b to US$19.5b, with a 12.0% to 12.5% gross margin guide. The article says the key point to watch is how much of that revenue is tied to Vera racks when the company reports results.
- Elon Musk Says a SpaceX-Tesla Merger Is a “Good Idea.” Here’s What Stands in the Way.
Speculation about a merger between SpaceX and Tesla is growing, with prediction platform Kalshi putting the odds of a deal before next May at 59%. On SpaceX's latest earnings call, Elon Musk said such a deal would be a good idea and that special committees at both companies are exploring a transaction, though they have not agreed on terms. Obstacles include Musk's roughly 85% voting control at SpaceX, the requirement for a 50% vote of all Tesla shares rather than just those that vote, and possible antitrust, national security and cross-border regulatory reviews. Gary Black, managing partner at the Future Fund, expects SpaceX to offer $420 per share for Tesla in an all-stock deal, implying only about 13% upside from current levels, and the article suggests much of the likelihood of a deal may already be reflected in Tesla's stock price.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.