Macrolyzed

This week

written Oct 9, 2026 · updated weekly

High safe yields favor cash, TIPS and after-tax munis; expensive, narrow US stocks, long bonds and rate-sensitive assets stand to lose if rates keep rising.

4 things to know
Safe yields now beat what stocks are priced to return, and after tax, munis edge Treasuries in top brackets.
  • Stocks' real extra return over TIPS is -0.47%: the 2.46% ten-year earnings yield is below the guaranteed 2.9% 10-year real yield (TIPS).
  • Tax-free muni yield (national) of 3.40% matches about 5.4% taxable in the top federal bracket, edging the 5.3% 10-year Treasury; state funds add more.
  • Caveat locking long yields risks price losses if rates rise further; a 30-year bond loses roughly 15% of its price per point of yield rise.
The Fed raised rates into a stalling job market, with an oil shock keeping inflation above its target.
  • Fed's policy rate rose to 3.8% in September, the first hike since 2023, with inflation (PCE, yearly) at 3.7% against a 2% target.
  • Total jobs (nonfarm payrolls) added just 29,000 in September; the quits rate at 1.9% says bargaining power sits with employers.
  • Oil (WTI) at $92 is up 60.2% year-to-date on a supply shock; gasoline at $4.35 a gallon is up 54.9% year-to-date.
Rising long yields are repricing everything rate-sensitive at once: bonds, small stocks, property and mortgages.
  • The 10-year Treasury yield at 5.3%, up 47 basis points (hundredths of a percent) in a month, is its highest since 2002.
  • One month: broad bond fund -2.1%, US small companies -3.6%, real estate funds (REITs) -5.4%, 30-year mortgage rate up 57 basis points to 7.3%.
  • Cash (3-month Treasury yield) pays 4.2% against 3.7% inflation: a real return while waiting, rare over the last twenty years.
Index gains sit in a few large tech companies while most stocks fall, and the calm fear gauge hides it.
  • Tech-heavy stocks (Nasdaq-100) rose 5.9% in a month while US small companies fell 3.6%, mid-size 2.1% and developed-world ex-US 3.3%.
  • An S&P 500 index fund is increasingly a bet on that handful of companies, not the broad economy.
  • Market fear gauge (VIX) at 15.7 is calm, below its 10-year average of 18.7, despite the correction beneath the surface.
Indicator As of Latest 1Y change vs avg History This week
Fed's policy rate Interest rates & bonds September 2026 3.8% ▼ -47 bps +5 bps
The Fed's first hike since 2023 and a bond rout push the 10-year Treasury yield to a 2002 high of 5.3%.
  • The Fed raised its policy rate to 3.8% on September 16; the next decision is October 28, with hike odds swinging after the weak jobs report.
  • Yield curve (10-year minus 2-year) at +0.5% is positive, but recessions have tended to arrive after the curve turns positive again, so it is not all-clear.
  • Credit stress (high-yield spread) at 3.0% is calm but rose 36 basis points in a month: lenders charge little for risk, pricing no trouble.
  • Tax-free muni yield (California) at 3.13% equals about 5.9% taxable for a top-bracket Californian, beating the 5.3% Treasury even with the 59% ratio historically rich.
3-month Treasury yield (cash rate) Interest rates & bonds 10/7/26 4.2% ▲ +21 bps +27 bps
10-year Treasury yield Interest rates & bonds 10/7/26 5.3% ▲ +115 bps +143 bps
30-year Treasury yield Interest rates & bonds 10/7/26 5.7% ▲ +95 bps +153 bps
Yield curve (10-year minus 2-year) Interest rates & bonds 10/8/26 0.5% ▼ -7 bps +42 bps
Credit stress (high-yield spread) Interest rates & bonds 10/7/26 3.1% ▲ +25 bps -4 bps
Broad bond fund (total US bond market) Interest rates & bonds 10/8/26 $70.22 ▼ -1.5% +4.1%
Tax-free muni yield (national) Interest rates & bonds 10/8/26 3.39% ▲ +27 bps +76 bps
2-year Treasury yield Interest rates & bonds 10/7/26 4.8% ▲ +119 bps +97 bps
5-year Treasury yield Interest rates & bonds 10/7/26 5.0% ▲ +131 bps +131 bps
5-year real yield (TIPS) Interest rates & bonds 10/7/26 2.7% ▲ +133 bps +138 bps
10-year real yield (TIPS) Interest rates & bonds 10/7/26 2.9% ▲ +114 bps +143 bps
Inflation the market expects (10-year) Interest rates & bonds 10/7/26 2.36% +1 bps +0 bps
Top-rated corporate bond yield (Aaa) Interest rates & bonds 10/7/26 6.3% ▲ +109 bps +141 bps
Lower-rated corporate bond yield (Baa) Interest rates & bonds 10/7/26 6.7% ▲ +93 bps +110 bps
Tax-free muni yield (California) Interest rates & bonds 10/8/26 3.12% ▲ +18 bps +73 bps
Munis vs Treasuries (yield ratio) Interest rates & bonds 10/8/26 59% ▼ -1,189 bps -459 bps
Tax-free muni yield (New York) Interest rates & bonds 10/8/26 3.33% ▲ +40 bps +84 bps
What leveraged loans pay Interest rates & bonds 10/8/26 6.40% ▼ -95 bps -20 bps
What AAA loan bundles pay Interest rates & bonds 10/8/26 4.85% ▼ -71 bps +34 bps