First Light News: Bond Yields Remain Elevated & Equities Slip Lower

• Markets are pricing in an 80% chance of a Fed rate hike in December (versus 19% for October), with September CPI data due next Wednesday serving as a key test for policy expectations
• Oil prices climbed above $100/barrel for Brent crude as vessel traffic through the Strait of Hormuz fell to a two-month low, adding geopolitical risk premium
• EUR/USD slid to $1.1165, retesting 17-month lows, with the French-German bond spread widening to 140 basis points as French 10-year yields hit 4.92%

Market Summary: Bond Yields Remain Elevated & Equities Slip Lower

Market Performance (October 8, 2026):

U.S. equities closed modestly lower Wednesday, with losses partially offset by a strong $39 billion 10-year Treasury auction. The Dow fell 0.7%, S&P 500 declined 0.2% (near its record high of 7,844), and Nasdaq dropped 0.2%. Small caps underperformed significantly, with the Russell 2000 down 1.3%. Asian markets continued weakness Thursday, with Japan's Nikkei down 0.7% and South Korea's KOSPI off 1.1%.

Fixed Income:

Bond yields reached multi-decade highs across developed markets. U.S. 10-year yields hover around 5.3% (highest since 2002), while UK 30-year Gilts hit 6% (highest since 1998). French 10-year yields reached 4.92%, with the OAT-Bund spread widening to 140 basis points. Rising real yields near 3% suggest robust growth expectations, but increasing term premiums signal investor uncertainty about long-term outlook.

Currency Markets:

EUR/USD slid to $1.1165, retesting 17-month lows, with $1.1112 identified as the next support level.

Commodities:

Oil prices rose approximately 1%, with Brent crude trading above $100/barrel. Vessel traffic through the Strait of Hormuz fell to a two-month low, supporting prices.

Fed Policy:

September FOMC minutes revealed unanimous support for rate increases, though for varying reasons. Markets price in 19% probability of a hike at October's meeting and 80% for December. Next Wednesday's September CPI data will be critical.

Upcoming Events:

Initial jobless claims expected at 200,000. Fed speakers Musalem, Waller, and Kashkari scheduled to speak, potentially influencing rate expectations ahead of CPI release.