Ten-Year Hits 5.10%, Highest Since 2007

The 10-year Treasury yield hit 5.10% Wednesday, highest since 2007. A flash PMI did it. S&P Global's composite jumped to 58.4 from 56.0, the strongest since July 2021, and input costs rose at the steepest rate in four years. Then a $70 billion five-year auction cleared at 5.033% on weak demand. The ten-year finished up 13 basis points and the 30-year got to 5.39%. SPX fell 58.61, or 0.8%, to 7,706.03, and the Nasdaq lost 1.1% a day after its record. Yields are 5.11% this morning. Premarket 7,660.

For two weeks the ten-year sat between 4.95% and 5.04% and the argument was about oil. Wednesday's move started somewhere else, with US businesses saying they're busy and raising prices. Oil joined in. Brent went back over $100, ending five lower sessions, and crude's higher again today. A week ago the talk was that the Fed would skip October with the midterms coming. Traders were pricing roughly three-in-four odds of an October hike by Wednesday, from about half. Then overnight the good news didn't register at all. Bessent says the China truce that was due to lapse Nov 10 now runs to Jan 10, announced as Xi landed for today's summit, and futures are still off 0.6% with the Nasdaq 100 down 1%. Claims land at 8:30 and Costco reports after the close.

Premarket's 55 under the flip at 7,715 and 15 under the put wall at 7,675, so price fell through the puts yesterday. Negative gamma runs unbroken from the flip down past 7,450, and the heaviest strikes sit between 7,620 and 7,675, right around us. Directly overhead, 7,666 to 7,682 packs the put wall, prior demand at 7,670, 7,677 and 7,681, and five moving averages: the 8, 13 and 21-day EMAs, the 20-day and the 8-week. The call wall at 7,745 barely registers. There's about nine times as much negative gamma under the flip as positive over it, so dealers sell weakness and buy strength the whole way down. First real support is prior demand at 7,631 with the 50-day at 7,626.

Rallies into 7,670-7,682 are for selling, first at 7,677, for 7,650 and 7,631. There's no long case until a close back over 7,682. A backtest of 7,631 and the 50-day is the only buy worth taking underneath. A close below 7,626 opens 7,611 and then 7,598.