10-Year Yield Hits Highest Since 2002 as Hike Odds Fall

The 10-year yield hit its highest since 2002 this morning. It touched 5.33%, past the 2007 peak, a day after core PCE printed 3.0%. Q2 GDP was revised to 2.2% from 1.5% the same day and ADP showed 90,000 jobs against forecasts near 70,000, so the PCE rally was gone by the close. SPX finished on its low at 7,651.54, down 0.3%, the Dow at its lowest close since June. Claims were 197,000 this morning. Premarket 7,681.

Hikes have been coming out of the price all week and it hasn't helped. October odds were about 70% on Monday and they're under half now, and over those same three days the 10-year went from 5.24% to 5.33%. On Sep 17 it fell the morning after a hawkish hike. The long end isn't following the Fed in either direction, and Wednesday it moved on growth. Stocks are paying unevenly. The S&P lost less than half a percent in September while the Dow lost 4.3% and the Russell 5.4%. Micron beat its own $50 billion guide by more than $4 billion, guided to about $61.5 billion, and it's a touch lower premarket. ISM and Waller at 10:00, payrolls tomorrow.

The gap stops just short of where it matters. Premarket is 9 under the flip at 7,690 and 19 under the call wall at 7,700, sitting on prior demand at 7,681 and the 13-day. Over 7,700 the gamma is positive at every strike past 7,750 and adds up to nearly seven times the wall, so clearing it pulls toward 7,713 and 7,725, where Monday's and Wednesday's highs both failed. Under price it's negative almost strike for strike but even, nothing heavy until the put wall at 7,650. That's Wednesday's close, with the 50-day at 7,648.

The lean is short under 7,700. Three straight sessions closed about 30 to 40 points under the open, and this one opens under the flip with yields at the highs. The sell is 7,698, the call wall with prior demand under it, for 7,681 and 7,670, and under 7,665 the target is 7,651, where shorts get covered. A hold over 7,700 after ISM ends it, with 7,713 and 7,725 next.