This week, we examine the latest labor market and inflation reports, the recent volatility in Treasury yields, and the implications for Federal Reserve policy. September's employment report revealed further signs of a deteriorating labor market. Nonfarm payrolls barely increased, with the entirety of the gains attributable to the health care and construction sectors. Downward revisions to July and August payrolls compounded the weakness, while annual growth in average hourly earnings fell to one of its lowest levels since the pandemic. Meanwhile, inflation offered little respite. Both the Consumer Price Index (CPI) and Producer Price Index (PPI) exceeded expectations, driven largely by rising gasoline prices. Particularly striking was the PPI report, which recorded its largest monthly increase since March 2022, while goods prices registered the sharpest monthly advance in the history of the series. Against this backdrop of weakening employment and resurgent inflation, yields on 10 year Treasury notes and 30 year Treasury bonds have risen sharply and become increasingly volatile.
28 Sept 2026
Yields Don't Lie
In this episode, recorded on September 24, we discuss the worst day for Treasury yields in 18 months, the latest PMI composite, the escalating conflict with Iran, and Oracle’s dispute with lenders. Treasury note and bond yields suffered their sharpest one day rise in 18 months following a strong headline PMI reading, hawkish commentary from a Federal Reserve governor, and a weak Treasury note auction. Beneath the robust PMI headline, however, the details were less reassuring. Survey respondents reported mounting supply chain delays, while inflationary pressures climbed to their highest level since October 2022. The conflict with Iran also took a turn for the worse after President Trump threatened to “annihilate Iran,” while Iran outlined far fetched preconditions for returning to the negotiating table. Finally, in another unwelcome development for private credit, Oracle threatened to invoke a force majeure clause if construction of one of its Blue Owl backed data centers misses its 2028 completion target. The dispute highlights another potential vulnerability for private credit investors, particularly as economic growth weakens and the enormous capital requirements of the AI buildout increasingly collide with tighter financial conditions.
28 Sept 2026
Pressure: Bonds, Buildings and the AI Boom
In this episode, recorded on September 18, we discuss the Census Bureau’s latest residential construction report, retail sales, rising Treasury yields, and developments in artificial intelligence. Housing completions fell 12 percent in August from the previous month and were 27 percent below their August 2025 level, leaving completions near levels last seen during the Global Financial Crisis. Retail sales exceeded expectations, but the headline strength was less impressive beneath the surface. Much of the increase can be attributed to higher prices and spending at gasoline stations and food services and drinking places. Meanwhile, yields on 10 year Treasury notes and 30 year Treasury bonds continued to climb as uncertainty surrounding the conflict in the Middle East intensified and concerns around the national balance sheet grew. Finally, leaders of several of the largest frontier AI labs called for a slower pace of AI development. Such restraint could weigh on AI related investment in the near term, potentially removing one of the principal supports for the recent equity market rally.
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