Payrolls rise just 29,000, rate-hike bets plunge; gold drops 3%, French yields hit 2002 high

Monday, October 5, 2026 | Review: September 28–October 4

US economic releases weakened in succession last week. September consumer confidence fell to its lowest level since 2014, several August PCE inflation measures came in below expectations, and September nonfarm payrolls increased by just 29,000. Investors sharply reduced their bets on another Fed hike in October. Rate-hike expectations remained elevated early in the week, when gold plunged more than 3% on September 28 and fell below $4,200 an ounce. Gold lost about 6.5% over September. Oil markets alternated between US–Iran tensions and the recovery in Saudi Red Sea exports, with Brent fluctuating above $100 a barrel. OPEC+ decided to leave November production unchanged. In Europe, France's 10-year government bond yield reached its highest level since 2002.

Last Week's Main Theme: Weak Data Reverse Rising Rate-Hike Bets

Markets were still pricing in another Fed hike in October at the start of the week. CME FedWatch put the probability at about 65% as of September 28, while the 10-year Treasury yield stood at 5.25% on September 29.

Subsequent releases were consistently weak. On September 29, the Conference Board reported that its September Consumer Confidence Index had fallen to 81.9, well below the Reuters poll forecast of 89.2 and the previous reading of 88.6. This was its lowest level since 2014. The Present Situation Index fell 7.9 points to 109.3, while the Expectations Index declined 5.9 points to 63.6. Respondents were primarily concerned about prices and rising oil and gas costs.

The US Commerce Department reported on September 30 that the August PCE price index rose 3.4% year on year and 0.3% month on month, while core PCE increased 3.0% year on year and 0.2% month on month. Apart from the headline monthly reading, which matched expectations, the other three measures were below forecasts, prompting markets to scale back October rate-hike bets. The third estimate of second-quarter GDP, released the same day, was revised up to an annualized 2.2% from 1.5% in the second estimate. ADP reported that private-sector employment increased by 90,000 in September, above the forecast of 75,000.

On October 2, the US Bureau of Labor Statistics reported an increase of 29,000 in September nonfarm payrolls, compared with a market forecast of about 90,000 compiled by FactSet. The unemployment rate was 4.2%, remaining within the 4.1%–4.3% range seen since March. July and August payroll gains were revised down by a combined roughly 60,000. Following the release, the market-implied probability of an October Fed hike fell to about 14%, and the 10-year Treasury yield eased to around 5.17%. A clear cooling in the labor market weakened the case for further tightening, although high oil prices and sticky inflation left the policy outlook divided.

FX: Dollar Posts Largest Monthly Gain Since June

The dollar index closed at 101.45 on September 30, up about 2.0% for September, its largest monthly gain since June.

In Europe, the French government unveiled its draft 2027 budget on October 1, proposing an additional €43 billion in spending cuts to reduce the fiscal deficit from 5.4% to 5.0% of GDP. However, public debt had reached about 119% of GDP, and planned borrowing for the following year was a record €340 billion. With the 2027 presidential election approaching, concerns over fiscal sustainability intensified. France's 10-year government bond yield rose to 4.96% on October 1, its highest since July 2002, while the French–German 10-year yield spread widened beyond 140 basis points, the most since 2012.

Gold: Daily Drop Exceeds 3%; September Loss Reaches About 6.5%

Rising Treasury yields, a stronger dollar, mounting expectations of an October hike and concerns that oil would fuel inflation drove spot gold down as much as roughly 3.3% on September 28, below $4,200 an ounce. Spot silver fell as much as about 5.1%. On September 30, spot gold closed at $4,158.70, leaving it down approximately 6.5% for the month and ending two consecutive months of gains.

Gold initially rose more than 1% after the October 2 payrolls release but failed to hold those gains and ended the day slightly lower. Reduced rate-hike expectations provided support, although elevated Treasury yields limited the rebound.

Oil: US–Iran Tensions and Export Recovery Take Turns Driving Prices

Brent returned above $100 a barrel on September 28 after Trump rejected Iran's proposal to reopen the Strait of Hormuz within seven days. Saudi Arabia resumed crude loadings at Yanbu on the Red Sea on September 29, with nearly 10 million barrels loaded at Yanbu and Al Muajjiz. Bloomberg reported that East–West pipeline flows had recovered to at least 3.5 million barrels per day, about half of full capacity. Brent fell 2.6% that day to $102.59 a barrel, while WTI dropped 3.5% to $89.38. Preliminary Kpler data showed a clear recovery in crude exports from major Middle Eastern producers in September, although shipments still relied on more expensive ship-to-ship transfers.

On October 1, media reports that the United States planned to deploy a third aircraft carrier to the Middle East pushed Brent up more than 4% to settle at $102.31 a barrel. WTI settled at $92.87.

Seven OPEC+ members, including Saudi Arabia and Russia, met online on October 4 and decided to keep their November production target unchanged at 31.01 million barrels per day. This marked a second consecutive month without an increase, following a combined rise of 752,000 barrels per day over the preceding four months. The next meeting was scheduled for November 1.

Equities: Early-Week Pressure Gives Way to a Post-Payrolls Rebound

High yields and weaker consumer confidence weighed on stocks early in the week. On September 29, the S&P 500 closed at 7,670.84, the Nasdaq at 26,797.54, and the Dow at 51,349.92. The VIX volatility index closed at 16.04.

Weak employment data eased concerns over rate hikes. On October 2, the Nasdaq rose 1.2% to 27,190.86, the S&P 500 gained 0.7% to 7,722.72, and the Dow advanced 0.5% to 51,176.96. Compared with the September 25 close, the Nasdaq gained 0.5% for the week, while the S&P 500 fell 0.3% and the Dow lost 1.3%.

Cryptocurrencies: Bitcoin Rises After PCE; ETF Inflows Continue

Bitcoin fell with risk assets to around $83,000 on September 28. Following the September 30 PCE release, it briefly moved above $85,500. Over the third quarter, Bitcoin gained about 44% and Ether rose roughly 70.9%.

US spot Bitcoin ETFs recorded net inflows of about $103 million on October 1 and $190 million on October 2.

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Risk Warning: This article is for reference only and does not constitute investment advice. Financial markets involve risk, and past performance is not indicative of future results.