US stock indices closed lower on Wednesday as concerns over high yields returned to the forefront, threatening earnings projections for credit-sensitive sectors. The S&P 500 and the Nasdaq 100 both dropped 0.2% from their peaks, while the Dow shed 341 points. Oil prices softened from earlier gains, while longer-maturity yields pulled back following a strong 10-year Treasury note auction. Still, tight credit conditions persisted, and FOMC members agreed that higher rates are needed to tame inflation, according to the latest meeting minutes. AI chipmakers and hyperscalers were mostly lower as high yields and wider credit spreads increasingly weighed on orders, with Nvidia down 0.7% and AMD shedding 0.5%, while Meta lost 2.4% and Oracle fell 0.8%. This came despite positive sector news, with SpaceX set to borrow $40 billion to buy Nvidia chips. SpaceX fell 2.5%, while Tesla lost 0.7%. Meanwhile, pharmaceutical and consumer staples stocks gained.

The yield on the 10-year Treasury note was at 5.28%, 8 bps below the 24-year high touched earlier in the session as oil prices swung lower and softened the alarm over energy inflation. OPEC+ shipped laden tankers through the Persian Gulf to limit the crunch for global refiners. This coincided with a strong auction for 10-year notes, which stopped through by 1.7 bps. Still, long-maturity yields were close to their highest since the start of the millennium as the risk of high inflation was combined with robust growth, widening budget deficits, and soaring levels of corporate debt supply. Minutes from the Federal Reserve's last meeting showed strong consensus within the FOMC that higher rates are necessary and the labor market is at full employment. Policymakers also noted that the Treasury market is functioning well, but the central bank must be alert to frictions due to high yields. Over 80% of the rate futures market is positioned for at least one more rate hike by the end of the year.

Median US inflation expectations for the year ahead rose 0.3 percentage point to 3.9% in September 2026, the highest level since May 2023, according to the latest Survey of Consumer Expectations. Year-ahead price expectations increased across several key categories. Gasoline expectations rose 1.7 percentage points to 4.6%, food to 5.3%, and medical care to 9.1%. Expectations for college tuition increased to 6.1%, while rent rose to 6.6%. At the three-year horizon, inflation expectations edged up 0.1 percentage point to 3.3%, while five-year expectations were unchanged at 3.0%.

Mexico’s car exports fell 11.8% year over year to 277,369 units in September 2026, following a 1.3% increase in August. Export volumes declined most for Mercedes-Benz (100%), followed by Nissan (33%) and Stellantis (20.4%). Mexico’s auto sector remains affected by uncertainty over US trade policy, as most vehicle shipments are destined for the US. The Trump administration has imposed tariffs on multiple trading partners, while the US did not agree to renew the USMCA in its current form during the agreement’s 2026 joint review. The pact remains in force pending resolution of outstanding issues or termination, while the US and Mexico continue bilateral negotiations, including on automobiles. Auto shipments also fell for Ford Motor (-13.2%), Honda (-17.7%), Acura (-9.9%), Audi (-18.6%), Toyota (-6.2%) and Volkswagen (-3.5%).

The average 30-year fixed mortgage rate jumped another 19 basis points to 7.49% in the week ended October 2, following an 18-basis-point increase the previous week and reaching its highest level since late November 2023, according to the Mortgage Bankers Association. It marked a seventh straight weekly increase, bringing the cumulative rise to 140 basis points since US-Israeli strikes against Iran began in late February. The latest increase followed another rise in Treasury yields, with both 10-year and 30-year rates reaching their highest levels since 2002 amid persistent energy-driven inflation and expectations for at least one more Fed hike this year, followed by further tightening in 2027. Total mortgage applications fell 4.2%, extending their decline to a fifth consecutive week. Refinancing applications dropped 7.5%, while purchase applications fell 2.1%.

France’s trade deficit narrowed to €6.1 billion in August 2026 from a revised €6.6 billion in July, coming below the expected €6.5 billion shortfall. Exports fell 0.8% month-on-month to €54.2 billion, as shipments of transport equipment (-5.7%), agricultural, forestry and fishing products (-5.4%), and other industrial products (-0.4%) declined. This was partly offset by higher refined petroleum product exports (+10.5%) and mechanical, electrical, electronic and computer equipment (+2.6%). By destination, exports declined to Asia (-8.4%), the Middle East (-43.2%), and Africa (-6.3%), while increasing to the EU (+0.9%) and the Americas (+9.5%). Meanwhile, imports fell 1.5% to €60.3 billion, led by transport equipment (-3.9%), refined petroleum products and coke (-3.4%), and agricultural, forestry and fishing products (-1.8%). By origin, imports decreased from the EU (-1.2%), Asia (-0.5%), and the Middle East (-39.6%), while increasing from Africa (+6.5%) and the Americas (+1.3%).