U.S. Treasury yields reached their highest levels since 2007 on Friday, with the 10-year benchmark yield climbing to 5.2%, a level not seen since the financial crisis era. The 30-year yield also hit a decade-high, reflecting heightened expectations of sustained Federal Reserve rate hikes and economic resilience. The selloff in Treasuries was driven by elevated oil prices, robust U.S. economic data, and bets on the Fed’s interest-rate trajectory, which saw a quarter-point hike the prior week. Deutsche Bank analysts noted that the move was primarily a real-yield phenomenon, with market breakevens showing little change, indicating that the bulk of the pressure stemmed from rising nominal yields rather than inflation expectations shifting materially.
Oil prices surged earlier in the week, climbing as much as 5% before moderating on reports of U.S.-Iran negotiations in New York. The talks centered on a potential phased resolution to the conflict, including Tehran reopening the Strait of Hormuz in exchange for the lifting of Washington’s economic sanctions. Meanwhile, Saudi Arabia intercepted six ballistic missiles fired by Iran-backed Houthis toward key Red Sea ports, including Taif and Yanbu, reigniting concerns about supply-chain disruptions.
Equities showed limited reaction to the broader market volatility, with futures tracking the Dow Jones Industrial Average, S&P 500, and Nasdaq 100 advancing modestly—up 0.1%, 0.1%, and 0.4% respectively—despite Thursday’s mixed session. The Dow and S&P 500 had both declined in the prior session, while the Nasdaq had only posted a marginal gain of 0.01%. Costco Wholesale Corporation reported stronger-than-expected earnings for its fiscal fourth quarter, with total revenue of $95.7 billion—surpassing estimates of $94.85 billion—and net sales rising 11.2% year-over-year to $93.9 billion. Earnings per share came in at $6.75, exceeding the $6.55 consensus by $0.20, while adjusted EPS included a non-recurring $0.15 benefit from tariff refunds. Comparable sales grew 9.4% on a reported basis and 6.7% after adjusting for gasoline and FX impacts, with regional growth varying across the U.S. (10.7% reported), Canada (5.0%), and other international markets (7.0%).
In a separate development, Elon Musk’s Colossus 2 data center in Tennessee is ramping up its use of Nvidia’s latest AI chips, with 110,000 GB200 and 440,000 GB300 units already deployed. Additional shipments of 220,000 GB300 chips are expected by next week, with another 220,000 due in November and a potential further 220,000 by late December—if “lucky”—aiming to nearly double the facility’s use of advanced Nvidia hardware by year-end. Musk described the center as the world’s largest AI supercomputer, underscoring the accelerating push into generative AI infrastructure.
The broader market backdrop remains one of divergent signals: Treasury yields reflecting a hawkish Fed outlook, oil prices buoyed by geopolitical tensions and supply-demand dynamics, and corporate earnings reinforcing the resilience of retail and consumer-facing sectors. The combination of these factors will likely keep markets under pressure for the remainder of the week.
