Next Week's Highlights: US Treasury Yields Hit Multi-Year Highs; PCE and Nonfarm Payrolls May Influence Fed Rate Hike Expectations

As the third quarter draws to a close and the fourth quarter begins, global markets are bracing for a pivotal week. For investors navigating the ongoing "Treasury storm," the trajectory of Federal Reserve policy is set to be a dominant theme.

Bond Market Turmoil Deepens

By Friday's close, the vicious cycle of rising oil prices—fueled by Middle East tensions—and their upward pressure on U.S. inflation had driven key yields higher:

• 2-year Treasury yield: 4.86%, marking a sixth consecutive weekly gain.
• 10-year Treasury yield: 5.16%, the highest since 2007.
• 30-year Treasury yield: Reached 5.5% on Friday, the first time since 2004.

(Source: TradingView)

Key U.S. Economic Data This Week

Two major data releases will likely shape the Fed's narrative and influence the volatile bond market.

Wednesday: August PCE Inflation & ADP Employment

The U.S. will release the August Personal Consumption Expenditures (PCE) price index. According to TD Economics consensus estimates:

• Headline PCE (YoY): Expected to hold at 3.7%.
• Core PCE (YoY): Expected to hold at 3.3%.

Both figures remain well above the Fed's 2% long-term target. The day will also feature ADP employment data, personal income, and consumer spending figures.

Technical Note: The Bureau of Economic Analysis will begin adjusting the price/deflation methodology for three PCE components. Goldman Sachs and JPMorgan estimate this could revise some prior core PCE readings downward by approximately 0.1 to 0.2 percentage points.

(Source: TradingEconomics; BEA)

Friday: September Nonfarm Payrolls

The Labor Department will release the September jobs report. A Reuters poll of economists forecasts:

• Nonfarm payrolls: 100,000 added, down from 162,000 in August.
• Unemployment rate: Expected at 4.2%.

With inflation still elevated, stronger-than-expected employment data could weigh on markets. The CME FedWatch Tool shows markets pricing in a 64.2% probability of a rate hike at the October FOMC meeting, and a 51% chance of an additional hike by December.

Equity Market Divergence

Despite the S&P 500 remaining within 1% of its mid-August record high and up roughly 13% year-to-date, internal market dynamics show strain:

• 8 of 11 S&P 500 sectors declined in September.
• The S&P 500 Equal Weight Index fell approximately 4% over the same period.

A Dense Week for Tech Catalysts

Monday: SpaceX Starship Flight 14

SpaceX plans the 14th test flight of Starship, with the earliest launch window set for Monday morning local time (Monday evening Beijing time), pending weather conditions.

Key Milestones:

• Starship will attempt to enter Earth orbit for the first time.
• The mission aims to deploy 26 next-generation Starlink V3 satellites.
• Each V3 satellite adds 1 Tbps of capacity to the constellation, totaling 26 Tbps for this mission—roughly 10 times the capacity of a Falcon 9 launch carrying V2 Mini satellites.

Tuesday: OpenAI DevDay 2026 & AI Policy Meeting

• OpenAI will hold its 2026 DevDay in San Francisco. CEO Sam Altman is scheduled to deliver a keynote at 10:00 a.m. local time (Wednesday 2:00 a.m. Beijing time). The event will cover APIs, developer tools, technical demos, and workshops.
• Separately, President Donald Trump, House Speaker Mike Johnson, and several tech CEOs (specific attendees unconfirmed) are expected to hold a meeting on artificial intelligence, potentially signaling U.S. AI policy direction.

Wednesday: Micron Earnings

Micron Technology will report fiscal Q4 2026 results after the close. The report is a key barometer for the DRAM, HBM, and broader AI data center supply chain.

October 1: Tesla Roadster, SpaceX Crew-13, and Google's TPU Satellite

• Tesla plans to officially unveil the long-delayed next-generation Roadster. Reports suggest it may feature a cold-gas propulsion system from SpaceX, fueling speculation about the vehicle's performance capabilities.
• SpaceX will launch NASA's Crew-13 mission via Falcon 9, sending four astronauts to the International Space Station.
• Google will launch a prototype satellite carrying its custom TPU into orbit via a rideshare mission, testing TPU performance in space for future orbital AI computing infrastructure.

Middle East Conflict Remains a Key Variable

Over the weekend, President Trump rejected Iran's proposal to reopen the Strait of Hormuz within seven days.

According to CCTV News, Iranian Foreign Minister Abbas Araghchi responded that Iran has received the initial U.S. reaction but awaits specific details from mediators. He stated:

• Iran will not make concessions on its established conditions.
• The reopening of the Strait of Hormuz depends on whether Iran's conditions are met.
• Iran will not compromise on these issues.

This means oil prices will remain a critical variable linking geopolitical tensions, inflation expectations, Treasury yields, and broader financial market direction.

Key Events Next Week (Beijing Time)

| Date | Event | |------|-------| | Mon, Sep 28 | Japan: BOJ July Monetary Policy Meeting Minutes | | Tue, Sep 29 | Australia: RBA Interest Rate Decision; Eurozone: September Industrial Sentiment; U.S.: August JOLTS Job Openings | | Wed, Sep 30 | China: September PMI; U.S.: September ADP Employment, August Core PCE, Q2 GDP (Final) | | Thu, Oct 1 | Eurozone: September Manufacturing PMI (Final); ECB President Lagarde Speaks; Japan: BOJ September Meeting Summary of Opinions | | Fri, Oct 2 | Japan: September Tokyo CPI; Eurozone: September CPI; U.S.: September Nonfarm Payrolls |

Market Holiday Notice

• A-shares: Closed October 1–7; reopen October 8.
• Hong Kong market: Closed October 1 only; normal trading resumes October 2.
• Stock Connect (Southbound & Northbound): Closed October 1–7; resumes October 8.