The 10-year hit 5.34%. Then cooled.

Good morning. The S&P 500 rose 0.2% Thursday to 7,666.45 and broke a three-day losing streak after the 10-year Treasury yield hit 5.34% intraday — its highest since 2002 — then settled at 5.24%, down 5 bp on the day (AP; Reuters; US Treasury). ISM's factory Prices Index jumped to 77.9. Nike guided soft after the close. Jobs land at 8:30 AM ET.

Stocks, VIX and yields are Thursday's close. Oil Thu settles are Reuters. Futures are early Friday Yahoo prints. Crypto as of ~11:52 PM ET Thursday. Nikkei Thu close.

One-line read: Thursday priced a yield spike-and-fade into a higher stock close. Overnight, Tokyo cooled — Nikkei about −0.7% near 68,465 early Friday (Kyodo) after Thursday's +3.3% Micron-fueled surge.

US bond yields cranked higher Thursday morning after ISM said factory input prices surged, then reversed as buyers returned. The 10-year touched 5.34% intraday — its highest since spring 2002 — and closed at 5.24% on the official daily par curve, down 5 bp from Wednesday's 5.29% (Reuters; US Treasury). Stocks followed the bond bounce: the S&P 500 rose 0.2% to 7,666.45, ending a three-day slide (AP).

The numbers: ISM Manufacturing PMI was 54.5 in September, a touch below August's 54.6 and under the ~55.0 Street estimate; the Prices Index jumped 6.8 points to 77.9 from 71.1 (ISM). Initial jobless claims fell to 197,000 for the week ended Sep 26, below the 200,000 Dow Jones consensus (Labor Department via CNBC/Asia Business Daily). The 2-year yield fell 10 bp to 4.78%, its biggest one-day drop since August 2025 on Reuters' live print path (US Treasury close; Reuters). WTI settled at $92.87 (+2.7%) and front-month December Brent at $102.31 (+4.4%) after Middle East troop headlines and a China oil-products export pause (Reuters). Europe took the harder hit: Stoxx 600 fell 1.3% to 626.65 (Yahoo; Reuters).

Why it matters: Hot factory prices keep the inflation story alive even when a single yield spike fades. Mortgage quotes, bond-fund prices and the growth stocks inside an S&P 500 fund still copy the 10-year. Your 401(k) owns both the fade and the fear.

What to watch: Whether the 10-year holds near Thursday's 5.24% Treasury close into Friday's open, and how September payrolls (consensus ~84,000; unemployment 4.1%, Dow Jones via CNBC) land at 8:30 AM ET ahead of the Oct 27–28 Fed meeting.

BLS publishes the September Employment Situation Friday morning. Wall Street expects about 84,000 payrolls and a 4.1% unemployment rate, after August's +162,000 surprise (CNBC citing Dow Jones; BLS schedule).

Why it matters: Payrolls, revisions and wages are the last big labor read before the Oct 27–28 FOMC — and they move the same yields that set mortgage quotes.

Fiscal Q1 revenue was $11.2 billion (−4% reported / −5% currency-neutral) with diluted EPS of $0.48; the company guided fiscal 2027 revenue to decline high-single digits and adjusted diluted EPS to $1.15–$1.35 (company release, Oct 1). After-hours, shares tumbled nearly 4% on secondary reports (TipRanks).

Why it matters: Nike is a consumer read your broad index fund still owns a slice of — guidance, not the beat on EPS, is what moved the stock.

The Nikkei closed Thursday at 68,956.72 (+3.3%), its highest close since Aug 17, after Micron's record quarter fueled AI/semiconductor buying; Micron itself rose 3% Thursday (Nikkei; Reuters; Yahoo). Early Friday it was about 0.7% softer near 68,465 (Kyodo).

Why it matters: Asia is the first vote after a US yield-whipsaw session — and a global equity fund owns that vote.

The 10-year spiked to 5.34%, then settled at 5.24%. For context, Wednesday's Treasury close was 5.29% — already above the June 2007 FRED daily high. Thursday's official close was 5.24%, down 5 bp, after an intraday print at 5.34% (highest since 2002, per Reuters).

Notice the last two weeks: the climb into the mid-5%s is still the rate story setting the stock story, even on a down day for yields.

ISM asks factory purchasing managers whether they paid more or less for inputs than last month. A diffusion index of 50 means "unchanged." September's 77.9 means a clear majority said prices rose — and the reading jumped 6.8 points from August. It is not CPI or PCE.

It is a survey of what factories feel in steel, aluminum, tariffs and oil-linked costs. Think of it as a temperature check on the factory floor, not the full inflation physical. When it spikes, bond traders often push yields up first and ask questions later — which is the tape Thursday morning wrote before the afternoon fade.

That's the desk. See you Monday at 6 AM ET.

— The Overnight Desk Team

Note: The Overnight Desk Team may hold positions in assets discussed. Nothing here is investment advice. · Sponsor: No one paid for any mention in this issue.