The market refuses to break. The 10-year touched 5.34% this week, Brent sat near $100, and inflation stayed elevated, yet growth and earnings keep delivering. Treasuries just posted their worst quarter since 1994, but October opened with investors buying stocks, led by technology. Friday’s soft jobs report finally gave the bond market some relief.

Top 5 Factors This Week

1. Treasury yields broke decisively higher.

The 10-year hit an intraday high of 5.344%, its highest since 2002, before easing toward 5.18%. The 30-year reached levels not seen in about 24 years. This is more than a Fed story. Inflation, deficits, heavy Treasury supply and a rising term premium are all pressuring the long end, even as some data have softened.

2. The labor market is cooling, but not cracking.

September payrolls rose just 29,000, below the 85,000 expected. August was revised down by 29,000 jobs, and July was revised to a 10,000-job loss. Unemployment ticked up to 4.2%, mostly because more people entered the workforce and demand-side hiring slowed across private service sectors. It has stayed between 4.1% and 4.3% since March. Wages rose only 0.1% for the month and 3.0% over the year, the slowest pace since 2021. Hiring softened, but no wave of layoffs emerged.

3. Oil remains the market’s second interest rate.

Brent slipped back below $100 late in the week, giving stocks and bonds some relief, and Hormuz exports are close to pre-war levels. Diesel remains expensive and geopolitical risk is elevated, so oil will keep inflation expectations elevated and the Fed’s outlook cautious.

4. The Fed debate shifted from September’s hike to what comes next.

Officials agree inflation is elevated but differ on whether more tightening is needed. Friday’s report moved the needle: markets now see better than an 80% chance the Fed holds on October 28, up sharply from before the report.

5. Stocks continue to absorb remarkably high rates.

Technology, AI spending and strong earnings are holding the market up, but not evenly. The gap between companies that can absorb higher financing costs and those that can’t keep widening. More stocks are setting 52-week lows than highs, even with the indexes near records.

Top 3 Factors to Watch Next Week

1. Whether the bond rally holds.

The jobs report knocked the 10-year back to about 5.18%. The real test is next week. If yields drift back up despite softer labor data, that tells us the selloff is about deficits and debt supply, not just the Fed.

2. Fed minutes and the October rate debate.

The September meeting minutes are released on the 7th. Until the October 28 decision, every report and Fed comment has one question: does the Fed need to hike again? After Friday, the answer is leaning toward no.

3. Oil and the Middle East.

Oil flows are improving, but headlines can reverse that quickly. Brent below $100 would ease pressure on inflation and yields. A higher move would do the opposite.

The Path Forward: Constructive, but Cautious

The economy, earnings, and stocks haven’t broken, but the price of money has changed. The market doesn’t need lower rates or cheaper oil to move higher. It needs stability.