An unexpectedly sharp cooling in the September US nonfarm payrolls report further reduced market expectations for near-term Federal Reserve rate hikes. US stocks advanced and the dollar weakened on Friday, while Treasury yields initially fell sharply after the data before staging a rapid V-shaped reversal into positive territory. Meanwhile, the Group of Seven announced the release of 100 million barrels of oil and petroleum product reserves, sending international crude prices tumbling during the session.

The US-Iran talks stalemate weighed on US stocks and lifted crude earlier in the week, but Friday's bad economic news became good news for equities, and oil fell sharply after the reserve release announcement.

Data released Friday by the US Labor Department showed September nonfarm payrolls rose by just 29,000, far below the 90,000 market consensus; August job gains were revised down from 162,000 to 133,000, the unemployment rate rose to 4.2%, and average hourly earnings growth slowed to 3.0% year over year. Following the release, market-implied odds of an October Fed rate hike fell further to roughly 20% to 21%, down from about 26% before the data.

US stocks and Treasuries then moved in sharply different directions. Equities, especially tech shares, were lifted by the easing of rate hike pressure, with the Nasdaq rising more than 1% and NVIDIA (NVDA) hitting an intraday record high; Treasuries failed to sustain their initial rally, with the benchmark 10-year yield rebounding more than 10 basis points from the daily low touched after the payrolls release.

Media analysis said bond investors initially bet that weak employment would reduce pressure on the Fed to keep raising rates, but then refocused on factors including energy prices, inflation expectations, fiscal deficits and term premiums; commentary noted that the soft payrolls report did not entirely rule out another rate hike in coming months.

This week, the main theme across global assets was not a single "risk-on" narrative but a clear divergence between AI tech stocks and traditional macro assets. The technology sector was the best-performing major sector for the week, while financials and healthcare lagged at the bottom.

This week, positive catalysts including Accenture's earnings and a Synopsys-OpenAI agreement drove AI trading further, while non-AI constituents of the S&P 500 fell overall for the week.

Long- and short-dated Treasury yields also diverged: the 10-year yield extended its weekly advance to a month, while the rate-sensitive 2-year yield fell after six consecutive weekly gains, suggesting that after comments from senior officials including Fed Vice Chair Jefferson dampened near-term rate hike expectations, market bets on short-term Fed policy eased somewhat, though concerns about long-term inflation, fiscal supply and term premiums persisted.

Among commodities, crude oil swung through the week amid Middle East supply risks, strategic petroleum reserve releases and refined product supply tightness; precious metals gold and silver failed to recover ground lost in early-week declines, remaining pressured by the dollar and high government bond yields.

On Wednesday and Thursday this week, the 10-year Treasury yield hit new highs since 2002 for two consecutive days, with yields across multiple maturities other than 2-year notes all above 5.0%.

US Stocks: Nasdaq Up Over 1%, Intraday Record; Delivery Data Lifts Tesla, Toshiba Expansion News Hits Memory Chip Stocks

The three major US stock indexes opened higher collectively on Friday and maintained gains throughout the session. The Nasdaq closed up 1.19% at 27,190.86, its highest close since September 22, after rising as much as 3% in morning trading to a record intraday high; the S&P 500 rose 0.73% to 7,722.72; the Dow gained 250.40 points, or 0.49%, to 51,176.96; the Nasdaq 100 rose 1%, setting records both intraday and at the close. The Russell 2000 rose 0.94%.

For the week, the S&P 500 fell 0.27%, its third weekly decline in four weeks; the Dow fell 1.26%, its fourth weekly drop in five weeks; the Nasdaq gained 0.45%, rising for a third consecutive week; the Nasdaq 100 rose 0.65%, also up for a third straight week; the Russell 2000 fell 0.16%, declining for a fourth consecutive week.

Among the three major US indexes, only the Nasdaq posted a weekly gain, while the S&P edged lower and the Dow fell more than 1%.

The technology sector was the best-performing major sector for the week, while financials and healthcare lagged at the bottom, with the KBW Bank Index falling 2.78% for the week.

Among sector stocks, chip shares broadly advanced on Friday, with the Philadelphia Semiconductor Index closing up about 2.4% and gaining 3.69% for the week. But memory chip stocks were sold off that day.

AI chip leader NVIDIA (NVDA) rose about 1.3% at the close after climbing roughly 3% intraday to set an intraday record for the first time in more than four months since mid-May, approaching its record closing high set in mid-May.

With Friday's intraday record, NVIDIA's intraday market capitalization pushed toward the $6 trillion mark.

Broadcom (AVGO) rose about 3.4% after reports that it agreed to provide up to $42 billion in loans to Anthropic; ON Semiconductor (ON) gained after raising its acquisition offer for Synaptics (SYNA) to $123 per share, while Synaptics surged about 14%.

Nikkei reported that Toshiba plans to double its production capacity for traditional hard disk drives used in AI data centers by fiscal 2027, raising market concerns that increased supply could weaken the current tight supply-demand balance. Toshiba's US peers Seagate Technology (STX) and Western Digital (WDC) both fell about 10.2% on Friday, SanDisk (SNDK) dropped about 3.8%, and Micron (MU) fell more than 2%.

Among other individual stocks, Tesla (TSLA) was lifted by third-quarter delivery data, rising more than 5% intraday before closing up about 4.7%. Tesla delivered 486,500 vehicles in the third quarter, down 2.1% year over year but about 5% above analyst expectations.

Nike (NKE) was the worst-performing Dow component, falling as much as 5.6% intraday Friday before closing down more than 3.6%. The company reported after Thursday's close that first-quarter sales in China plunged 26%, while its guidance for the fiscal year was significantly weaker than market expectations, and it plans to initiate layoffs.

Treasuries: 10-Year Yield Hits Daily Low After Payrolls, Then Rebounds More Than 10 Basis Points

Treasuries initially drew strong buying after the payrolls data. Shortly after the release, the benchmark 10-year Treasury yield fell rapidly during European trading, breaking below 5.16% to a daily low, while the 2-year yield tested 4.70%, its lowest since September 21.

But as trading deepened, yields rebounded quickly, erasing intraday declines and turning higher in morning US trading. The 10-year yield tested 5.30% in afternoon trading to a daily high, near the 5.34% reached Thursday that marked consecutive two-day highs since 2002, while the 2-year yield tested 4.85% in the afternoon to a daily high, both rebounding more than 10 basis points from their daily lows.

Media noted that the bond market initially believed cooling employment would reduce pressure on the Fed to keep hiking, and therefore bought Treasuries; but as the market reassessed, rising energy prices could stoke inflation pressure, while US fiscal deficits and massive Treasury supply continued to weigh on long-term yields. Additionally, against the backdrop of recent global bond market selloffs, term premiums also became a factor for investors.

In other words, the weak payrolls report lowered short-end rate expectations but was not enough to fully reverse the supply, inflation and term premium pressures facing long-term Treasuries.

For the week, the 10-year Treasury yield rose about 12 basis points cumulatively, climbing for a fifth consecutive week in its longest weekly streak since November 2024; the 2-year yield fell about 3 basis points cumulatively, ending six consecutive weekly gains. This long-short divergence reflected easing market bets on the short-term Fed policy path, while concerns about long-term inflation, fiscal supply and term premiums remained.

This week, only the 2-year Treasury yield declined cumulatively, while yields on other maturities continued to climb.

European Bonds: French-German 10-Year Spread Widens to Largest Since 2012

European bond markets continued to swing violently.

On Friday, the yield spread between German and French 10-year government bonds widened past 140 basis points, at one point reaching 150 basis points, the widest level since the 2012 European debt crisis; the French 2-year yield rose as high as 3.84% intraday, while the German 2-year yield fluctuated between 2.94% and 3.06%. Over the past week, the German 2-year yield fell nearly 25 basis points, while the French 2-year yield instead rose nearly 14 basis points.

The market focused more on France's fiscal position. Earlier, the French 10-year government bond yield approached 4.95%, a high of about 20 years, while the French-German 10-year spread breached 140 basis points, reaching its widest level since the 2012 European debt crisis.

For the week, the German 2-year government bond yield fell nearly 25 basis points cumulatively, while the French 2-year yield rose about 14 basis points.

As global bond markets were broadly hit by high oil prices, inflation and fiscal deficit pressures, France is becoming one of the markets with the most concentrated risk in European bonds. France's fiscal situation and political uncertainty continued to be important pricing factors for European bonds.

Forex: Dollar Index Accelerates Decline From 1.5-Year High After Payrolls; Offshore Yuan Briefly Approaches 6.70

The dollar weakened markedly after the payrolls release. The ICE US Dollar Index (DXY) briefly turned higher before the report, then quickly extended losses after the release, touching a daily low of 101.67 in afternoon US trading, down more than 0.4% on the day, retreating from the high above 102.20 reached Thursday that was the strongest since April 2025, falling after four consecutive gains and posting its first daily decline this week, though it continued to gain for the week and rose for a third consecutive week.

The Bloomberg Dollar Spot Index rose for a third straight week, hovering near the upper end of its 18-month trading range.

The yen rebounded after two straight declines, with USD/JPY rapidly extending losses after the US jobs report and breaking below 157.00 to a daily low, near the 156.37 reached Wednesday that was the lowest since September 18, down more than 0.7% on the day; EUR/USD quickly turned higher after the US jobs report, touching a daily high of 1.1286 in morning US trading, moving away from the low since May 2025 reached Thursday.

The offshore yuan (CNH) touched a daily low of 6.7175 against the dollar in early Asian trading, then turned higher and maintained gains; after the US payrolls release, gains quickly expanded, and in morning US trading it approached the 6.70 level at 6.7008, the strongest since September 23, rebounding after two consecutive declines and gaining for the week after falling last week.

Bitcoin (BTC) broke above $87,100 during European trading to its highest since September 23, then continued to give back gains after the US open and turned lower by midday, falling below $83,900 at one point to a daily low, down more than $3,000 or nearly 4% from the daily high; it was below $84,400 at the US close, down about 0.5% over the past 24 hours and up about 0.5% over the past week.

Crude Oil: G7 to Release 100 Million Barrels of Reserves, Prices Plunge Intraday

International oil prices were hit hard Friday by news of the G7 strategic reserve release. The G7 announced it would coordinate the release of 100 million barrels of oil and petroleum product reserves through the International Energy Agency (IEA), planned to last four months, including a large amount of diesel reserves.

After the announcement, US WTI crude fell to around $88.06 per barrel intraday, down more than 5%; Brent crude fell to near $98.40, down nearly 4%. At the close, the WTI November contract fell 1.90% to $91.11 per barrel; the Brent December contract fell about 0.06% to $102.25 per barrel.

Based on front-month contract closing prices, US crude fell about 1.41% for the week, declining for a second consecutive week; Brent rose about 4.94%, gaining for a second consecutive week.

After news that European countries were considering releasing oil reserves, Brent fell below $100 intraday Friday, with losses widening to nearly 4% after the G7 decision before recovering the $100 mark.

Media noted that the main pressure in the energy market is no longer just crude supply but also refining capacity and refined product supply. Declining refining capacity in the Middle East and Russia has made diesel and other refined products a new key pressure point for the market, one reason the G7 action focused on releasing refined product reserves.

Gold: Spikes After Payrolls, Then Turns Lower After Gaining More Than 1%

Gold also experienced a clear intraday reversal. After the payrolls release, gold futures rose to near $4,259, up more than 1%, while spot gold briefly broke above $4,220; but as Treasury yields rebounded, gold gave back gains and turned lower in morning US trading.

By Friday's close, the front-month COMEX October gold futures fell 0.94% to $4,133.70 per ounce, retreating after three consecutive gains to the lowest close since August 4, down 3.59% for the week in the biggest weekly drop since the week of June 5, declining for a second consecutive week.

Gold spiked in the short term after the US payrolls report, then turned lower.

New York silver and gold futures, which reversed three consecutive declines on Thursday, both extended gains after the US payrolls report but turned lower in morning US trading. The front-month COMEX October silver futures fell 1.23% to $59.977 per ounce, the lowest close since August 3, down 6.68% for the week in the biggest weekly drop since the week of June 26.

Gold and silver futures both fell for a second consecutive week this week and declined in five of the past six weeks.

New York copper futures rebounded slightly after falling Thursday. COMEX October copper rose 0.15% to $6.492 per pound, moving away from the lowest close since September 16 reached Thursday, down 3.1% for the week in the biggest weekly drop since June 26, retreating after two consecutive weekly gains.