High Yields and Rates, Decent Economic Data, and Reunions

October 4, 2026

BOND YIELDS: The yield you can get on a 10-year U.S. Treasury popped up to nearly 5.25%. As you can see below, the Fed rate hikes that led to the bond sell-off in 2022 caused the 10-year to pop up to the range it has been in for the last few years. The current movement came after some relief, and it is causing the recent choppiness in the markets. This new movement is being caused by the recent spate of inflation, the Fed's new upward move on interest rates, and the vast amount of new bonds being issued by various governments, including but not limited to the U.S., and AI-related companies that are issuing bonds to fund expansion.

MORTGAGES: Unfortunately, the average rate for a 30-year mortgage has followed the same direction lately.

STOCKS AND BONDS STRUGGLE ONCE AGAIN: Tech stocks in the S&P 500 (1.8%) and the NASDAQ Composite (0.45%) had a positive week, but most of everything else was negative for the week. Early and into mid-week, it was rising bond yields and oil prices that continued to be the prime market movers, and the movement was negative. Oil prices climbed early, but later in the week cooled after Europe released some oil and diesel reserves. Positive inflation news and a soft jobs report buoyed stock markets later in the week.

LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.

29,000 NET NEW JOBS IN SEPTEMBER: The U.S. economy added 29,000 new jobs in September. Average hourly earnings rose only 0.1% and are up 3.0% from one year ago. The unemployment rate ticked up from 4.1% to 4.2%. This relatively soft report caused many to believe the Fed got the data it needed to hold off on a rate hike in October. One sector doing well is workers without high school degrees. The unemployment rate for that sector is down to 4.2%, the lowest on record (going back to 1992). The labor force participation rate rose to 61.8% from 61.6% as 485,000 new workers entered the workforce.

U.S. MANUFACTURING CONTINUES TO EXPAND: According to the Institute for Supply Management, activity in the U.S. manufacturing sector continued to expand in September, but at a slightly slower pace than the previous month. The index reading is 54.5 (anything over 50 represents growth). Activity in the manufacturing sector has now grown for nine consecutive months. AI-related capital investment, reshoring of production, and increased defense procurement seem to be the primary drivers of the consistent growth. Order backlogs have grown each month in 2026 after more than three straight years of contraction.

PCE INFLATION DATA: The Fed closely watches the Personal Consumption Expenditures index. It comes later than the Consumer Price Index. The August report just came out and it reported a 0.3% rise in prices and a year-over-year rise of 3.4%. The "core" number that excludes food and energy was up 0.2% and 3.0% for the year. Data from prior periods was adjusted as well, and all the adjusted data showed that previous inflation was a bit lower, incomes rose a bit faster, and the savings rate was a bit better. All of this data decreased the likelihood of a rate hike when the Fed meets again in October (although most still believe another hike will come in December).

ONE OF THOSE RANDOM REUNIONS: Last Monday, I visited with clients in Charleston, SC, in the morning, and then had to catch an afternoon flight to Philadelphia. My wife and I had an hour or two to kill, so we spent it in Charleston. At one point, while walking a busy street, I glanced to my left and then took a double take, as did they. There were two of my classmates from college. I have seen them from time to time over the years (they are classmates who started dating and got married after graduation), but this was quite the random and fun reunion.

WESTERN PA: A big contingent of my wife's family and I traveled across the state to Beaver, PA, to enjoy time together and to see, for the first time, the marker put on my in-law's grave. We found a nice rental to accommodate all of us for a fun and meaningful time together.

Have a great week!

Our purpose is to honor God by helping our clients see the objective, find the path, and navigate past the obstacles to a more prosperous future.

Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545

dmacgray@stonecropadvisors.com

"The greatest leader is not necessarily the one who does the greatest things. He is the one that gets the people to do the greatest things.” Ronald Reagan*

"Do nothing from selfish ambition or conceit, but in humility count others more significant than yourselves." Philippians 2:3 (ESV)

*In commemoration of the 250th anniversary of the United States, I am finding a quote from a president each week, in order. This is the 40th week, and Ronald Reagan was our 40th president.

SOURCES:

STOCKS AND BONDS STRUGGLE ONCE AGAIN: https://www.wsj.com/finance/stocks/u-s-stocks-rise-as-jobs-report-tempers-rate-outlook-fde051d1?mod=stocks_news_article_pos5 AND https://myweeklystock.substack.com/p/weekly-market-recap-sep-28-oct-2?publication_id=697043&post_id=218401434&isFreemail=true&r=s86er&triedRedirect=true

PCE INFLATION DATA: https://www.ftportfolios.com/Commentary/EconomicResearch/2026/9/30/personal-income-rose-0.2percent-in-august

29,000 NET NEW JOBS IN SEPTEMBER: https://www.ftportfolios.com/Commentary/EconomicResearch/2026/10/2/nonfarm-payrolls-increased-29,000-in-september

U.S. MANUFACTURING CONTINUES TO EXPAND: https://www.ftportfolios.com/Commentary/EconomicResearch/2026/10/1/the-ism-manufacturing-index-declined-to-54.5-in-september

© 2026 Anno Domini, Stonecrop Wealth Advisors, LLC, All Rights Reserved

*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it is a common index to track the performance of U.S. equity markets, especially the large-cap markets.

*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.

*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.

Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.

The information contained herein has been compiled from third-party sources (see above) and is believed to be reliable; however, its accuracy is not guaranteed. This newsletter is not an offer or a solicitation to buy or sell securities, and you should not construe it as investment, tax, or legal advice, or a specific investment recommendation. Any opinion included in this newsletter is our judgment as of the date of this report and is subject to change without notice.

If you want any additional information regarding Stonecrop Wealth Advisors, including management fees and expenses, you can contact us directly or review our Form ADV Part 2, which can be found here (www.adviserinfo.sec.gov), or which we will be happy to provide to you upon request. Only God knows the future, and so while past performance can be helpful information, it is not a guarantee of future performance, which could be completely different.

SDG