The US 30 year Treasury yield rose above 5.37%, the highest settlement since June 2004, while 30 year mortgage rates climbed to 7.12%. This shift followed S&P Global business activity data for September, where the composite PMI hit a 5 year high of 58.4, exceeding the 55.3 estimate. Manufacturing PMI rose to 57.0 and services climbed to 58.7, fueling a spike in borrowing costs that drove the 10 year note above 5.1%, its highest level since 2007. Mortgage applications for the week ended Sept. 18 fell 1.5%.

Market sentiment has shifted toward a hawkish Federal Reserve, with prediction markets estimating a 70% chance of another rate hike in October. Pressure on the bond market is compounding as oil prices rise above $90 per barrel and business input costs hit their steepest increase since 2022. The 2 year yield also reached 4.90% for the first time since May 2024, reflecting expectations of the first consecutive interest rate hikes since May 2023.