S&P 500 hits record as hawkish Fed minutes lift yields; Hormuz ship attacks surge

US equities advanced unevenly near record levels last week. On October 6, the S&P 500 surpassed its August closing record and ended the week up 1.2%. Minutes of the Fed's September meeting showed that most officials favored one more increase this year, lifting the 10-year Treasury yield to its highest since 2002. Bitcoin briefly approached $80,000 as spot ETFs suffered heavy outflows. In the Middle East, attacks on ships near the Strait of Hormuz reached their highest weekly total since the war began, and repeated Houthi attacks on Saudi airports helped push Brent above $104 a barrel on October 8. Gold rebounded from a two-month low to gain about 1.3% for the week.

Weekly overview: Hawkish minutes lift Treasury yields to highest since 2002

The Fed released its September meeting minutes early on October 8, Beijing time. Most officials believed another increase this year would probably be appropriate. Treasury selling accelerated after the release, and the 10-year yield closed that day, October 7 US Eastern time, at its highest since 2002. On October 9, St. Louis Fed President Musalem said the Fed needed to raise rates again.

Higher yields intensified market divergence. Equity indices remained resilient ahead of earnings season, but technology shares and cryptoassets came under pressure. Spot Bitcoin ETFs posted their largest daily outflow since late June. Middle Eastern tensions spread from shipping to civilian facilities inside Saudi Arabia, increasing the risk premium in oil.

Oil: Ship and airport attacks raise the risk premium

Reuters, citing three maritime security sources, reported at least 12 attacks on oil tankers and LNG and LPG carriers near the Strait of Hormuz during September 28–October 5, the highest weekly total since the war began. The International Maritime Organization (IMO) recorded nine incidents over the same period. Maritime sources said IMO verification and formal registration typically take longer. September crude exports from the Gulf region, excluding Iran, had recovered to more than 81% of prewar levels, a recovery threatened by frequent ship attacks.

On October 7, Houthi attacks on Riyadh's King Khalid International Airport and Abha Airport killed three foreign nationals and injured 36 people. On October 8, Iran intensified attacks on tankers in the Strait of Hormuz, while a hurricane threatened Gulf of Mexico production. Brent rose around 4% to $104.28 a barrel and WTI settled at $91.49. Oil eased on October 9 after Trump said the United States would not take military action against Iran before the US election.

On October 10, another Houthi missile hit King Khalid International Airport. Saudi Arabia's General Authority of Civil Aviation initially reported 12 deaths and 309 injuries, with the death toll later rising to 13. The airport was attacked again on October 11. Repeated Houthi attacks on Saudi airports since October 7 had killed at least 20 people in total.

Gold: Rebounds from two-month low to gain about 1.3% for the week

Spot gold touched a two-month low on October 7 under pressure from rising Treasury yields, then rebounded 0.4% to $4,127.40 an ounce on October 8. Bargain buying lifted gold 1.5% to $4,194.36 on October 9, a one-week high, taking its weekly gain to around 1.3%.

Euro: French budget faces resistance as ECB expected to hold

France's fiscal problems remained a major source of uncertainty for the euro. On October 9, the National Assembly's finance committee almost unanimously rejected the revenue section of the draft 2027 budget. The budget was due for full parliamentary debate this week. The 10-year French–German government bond spread narrowed from its level early in the week.

A Reuters survey published on October 8 showed that 70 of 73 economists expected the ECB to hold rates on October 29, while 64 expected a 25-basis-point increase in December. The ECB deposit rate stood at 2.50%, and euro-area September inflation was 3.8%.

Equities: S&P 500 sets record and gains 1.2% for the week

On October 5, the Nasdaq rose 1.05% to a record 27,477.31 and the S&P 500 gained 0.66% to 7,773.95. On October 6, the S&P 500 advanced 0.58% to 7,818.93, surpassing its August closing record. The Nasdaq rose 0.45% to another record of 27,599.79, while the Dow gained 0.49% to 51,521.28.

US equities retreated after the minutes. On October 8, the Nasdaq fell 1.25% to 27,193.34 and the S&P 500 declined 0.47% to 7,765.36. The technology-sector ETF XLK lost 1.8%, while the energy-sector ETF XLE gained 3.0% alongside oil. Stocks rebounded on October 9: the S&P 500 rose 0.6% to 7,811.54, the Dow gained 0.8% to 51,654.95 and the Nasdaq added 0.6% to 27,366.17. Compared with the October 2 close, weekly gains were 1.2% for the S&P 500, 0.9% for the Dow and 0.6% for the Nasdaq.

Cryptocurrencies: Heavy ETF outflows as Bitcoin approaches $80,000

Hawkish minutes and higher Treasury yields pushed Bitcoin down around 2.6% to about $83,400 on October 7. It fell as low as approximately $80,427 intraday on October 8 before stabilizing.

Fund flows weakened markedly. US spot Bitcoin ETFs recorded net outflows of about $90 million on October 5 and net inflows of roughly $119 million on October 6. Net outflows reached around $485 million on October 7, the largest daily amount since June 25, followed by another $244 million on October 8. Flows became mixed again on October 9.

Events to watch this week (Beijing time)

Risk notice: This material is for reference only and does not constitute investment advice. Financial markets involve risk, and past performance does not indicate future results.