US Market Recap: Long Yields at a 24-Year High End the Winning Streak

1. The three indices: the streak ends and the Russell 2000 falls hardest

2. Sectors: rotating out of cyclicals and into defence, and industrials' drop has a paper trail

3. Mega-cap tech: Apple and Amazon held the tape up, Meta fell more than 2%

4. Semiconductors and equipment: the SOX -1.15%, and the selling was in auto and industrial chips

5. Memory and storage: two completely different trades inside one sector

6. Optical networking and AI hardware: yesterday's leaders were today's worst decliners

7. China ADRs: the Golden Dragon +0.12% as the three biggest weights fell

8. Notable movers: regulatory paperwork, a rate reset and earnings guidance

9. Key events of the day

• Fed September minutes: the hike was unanimous and most officials leaned toward one more this year

  The September 15-16 meeting raised the federal funds target range by 25 basis points to 3.75%-4.00% on a 12-0 vote, the first hike since July 2023. The minutes showed that "most participants judged that further increases in the target range for the federal funds rate could be appropriate before the end of the year", with inflation risks seen as tilted to the upside and some participants noting that AI infrastructure spending could push aggregate demand above supply. Markets priced about 19.4% odds of an October hike versus 50.9% a week earlier, and about 64.1% for a cumulative 25 basis points by December.
• A 390 billion dollar 10-year auction cleared at 5.300%, the highest stop-out since 2000

  The bid-to-cover ratio was 2.77 against a 2.51 average over the prior 12 auctions, with indirect bidders taking 80.3% and directs 17.1%; the stop was nearly 2 basis points below the when-issued yield. After the result the 10-year yield retreated from an intraday high of 5.365% (the highest since April 2002) to about 5.28%, while the 30-year peaked at 5.732% (the highest since May 2002) and closed near 5.67%. The curve finished with the 2-year at 4.77% (-2bp), the 10-year at 5.28% (+1bp) and the 30-year at 5.67% (+3bp).
• New York Fed survey: one-year inflation expectations rose to 3.9%, the highest since May 2023

  In the September Survey of Consumer Expectations the median one-year inflation expectation rose 0.3 percentage point to 3.9%, while the three-year expectation climbed from 3.2% to 3.3%. Released in the morning, the hawkish print sat alongside the afternoon minutes as the macro backdrop for higher yields and a defensive rotation.
• FTC and USDA open a public inquiry into the farm equipment market

  The two agencies jointly sought public comment on "issues affecting the market for the manufacture and distribution of agricultural equipment, including potential anticompetitive conduct", responding to farmer complaints about purchase and repair. Caterpillar -5.75% was the biggest drag on the Dow, with Deere -3.80%, AGCO -6.06% and CNH -6.10%, making industrials the weakest sector of the day.
• Metals and the dollar: gold regained 4,100 after losing it, silver broke 60 dollars

  London spot gold closed at 4,110.5 (-1.28%) after briefly breaking below 4,100, and spot silver at 59.75 (-2.58%), losing the 60 dollar level; December COMEX gold settled at 4,136.70 (-1.20%) and silver at 60.05 (-2.50%). The dollar index closed at 102.24 (+0.4%) after touching almost 102.50 intraday. The gold-to-silver ratio rose to 68.75, near the low end of its three-year range.
• Memory bucked the tape: Micron up more than 4% and Penguin Solutions up 13%

  Micron Technology rose +4.06% to 1,088.00 dollars and SanDisk +1.92%, with D.A. Davidson arguing that AI-driven memory demand will exceed supply for the next two years. Penguin Solutions reported fourth-quarter revenue up +67.7% year on year to 566.7 million dollars, with integrated memory at a record 341 million dollars (+158%), and the stock closed up 13.08%.
• IEA members agree to accelerate the release of about 100 million barrels of oil reserves

  The IEA said on October 7 that member governments agreed to speed up the stock release announced in March, and that about 100 million barrels could still come to market if all previously committed volumes are delivered; on diesel tightness, members agreed to prioritise diesel where conditions allow. The IMF's managing director said the Brent futures curve implies high prices could persist into 2027. November WTI settled at 88.28 dollars a barrel (-1.30%) and December Brent at 100.20 dollars (-0.38%).
• Elsewhere in macro: India hikes for the first time in nearly four years, Iraq devalues

  The Reserve Bank of India raised its repo rate by 25 basis points to 5.50%, its first increase since February 2023. Iraq's central bank moved the official dollar selling rate for the public from 1,320 dinars to 1,520 dinars to cope with the fiscal strain of disrupted oil exports. China's foreign exchange reserves at end-September were 3.4003 trillion dollars (down 38.1 billion month on month), with gold reserves of 77.47 million ounces and a 23rd straight month of accumulation. Hang Seng Indexes said the Hang Seng Tech Index will expand from 30 to 50 constituents.

10. Cross-asset: oil down, gold down, silver down, dollar up, long yields at a 24-year high

11. What we take away

• The long end has taken back control of pricing, and this time there is no rate-cut expectation to rescue it
  The 10-year touched 5.365% and the 30-year 5.732% intraday, both back to 2002 levels; strong demand at the 390 billion dollar auction pulled the belly of the curve back to 5.28% and narrowed the index loss from 0.68% to 0.22%. A clean auction buys time, it does not change direction: the September minutes still say another hike is possible before year-end and October odds remain 19.4%. There is no evidence yet that pressure on the denominator has eased.
• The rotation is out of growth and cyclicals and into cash flow and defence
  Health care +1.06%, consumer staples +0.10% and utilities +0.01% were the only non-negative sectors; industrials -2.14%, materials -1.53% and real estate -1.35% led the decline and the Russell 2000 fell -1.31%. The order of losses maps closely onto sensitivity to the cost of credit, not onto business momentum.
• The industrials sell-off is a documented event, not a macro narrative
  The FTC and USDA jointly opened a public inquiry into farm equipment manufacturing and distribution; Deere fell -3.80%, peers AGCO -6.06% and CNH -6.10%, and Caterpillar -5.75% was the biggest Dow drag. Auto and industrial chipmakers fell in the same session (ON Semiconductor -4.40%, STMicroelectronics -4.33%, NXP -3.75%), and both lines point to one thing: higher credit costs directly cut expectations for capital goods demand.
• Storage is no longer one trade: HDD and memory are two different stories
  On the same day the HDD names were digesting the capacity threat from Toshiba's expansion and the bid for TDK (Western Digital -1.37%, Seagate +0.24%), while memory was trading a shortage (Micron +4.06%, SanDisk +1.92%) with Penguin Solutions' +67.7% revenue growth as confirmation. The word "storage" no longer describes the exposure: before deciding whether to be long or short, one has to separate NAND/HBM from nearline hard drives.