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
Inflation (PCE, yearly) Inflation August 2026 3.7% ▲ +99 bps +80 bps
Headline inflation at 3.7% is mostly an oil story; core runs milder, and the bond market still trusts the 2% target.
  • Inflation (PCE, yearly) at 3.7% versus core inflation at 3.2%: gasoline at $4.35, up 54.9% year-to-date, drives the gap.
  • Producer prices (yearly) at 5.2% run above consumer prices at 3.7%, pointing to more price pressure ahead, not relief.
  • Inflation the market expects (10-year) holds at 2.36%, flat on the month: the yield surge is real rates rising, not inflation fear.
  • Caveat September CPI lands mid-October and could swing the Fed's October 28 decision either way.
Core inflation (ex food & energy) Inflation August 2026 3.2% ▲ +39 bps +18 bps
Consumer prices (CPI, yearly) Inflation August 2026 3.7% ▲ +77 bps +65 bps
Core consumer prices (CPI ex food & energy) Inflation August 2026 2.8% ▼ -35 bps -50 bps
Rent inflation (yearly) Inflation August 2026 3.0% ▼ -44 bps -151 bps
Gasoline price (regular, per gallon) Inflation 10/5/26 $4.35 ▲ +39.4% +29.3%
Producer prices (yearly) Inflation August 2026 5.2% ▲ +253 bps +228 bps
Core producer prices Inflation August 2026 4.4% ▲ +146 bps +111 bps
Money supply (M2) Inflation August 2026 $23,343B ▲ +5.7% +7.6%