US business activity expanded in September at the fastest rate in over five years, triggering a surge in Treasury yields. S&P Global reported a manufacturing PMI of 57.0 against a 53.7 estimate, a services PMI of 58.7 versus 55.8, and a composite index of 58.4 against 55.3. The 10 year Treasury note yield climbed to 5.081%, the highest level for that security since July 2007.

The growth data pushed the probability of a Federal Reserve interest rate hike on October 28 to 69% in the Kalshi prediction market. While some Wall Street analysts argue the Fed will avoid a hike just before midterm elections, bond markets are reacting to input costs hitting a four year high. This volatility follows a trend since 2024 where long term yields rose during a sustained cutting cycle, a reversal of patterns seen over the previous 50 years.