-The Bloomberg IG Index ended the week slightly wider near 77bps — the tightest spread level since 1998 — largely shrugging off the rates selloff and increased rate volatility thus far. Hyperscaler paper continues to remain the exception, spreads +25bp wider YTD on the AI capex supply wave.
-Supply: ~$30bn priced on the week, landing at the high end of dealer forecasts after a $3bn Thursday. September tracking toward ~$170bn — a heavy month by any measure but tracking lower than expectations. Next week dealers are expecting $50bn of new IG issuance. YTD IG issuance remains elevated, north of $1.6tn, +27% vs last year, with AI capex and the low-coupon maturity wall doing the heavy lifting.
-Yields: the 10Y ripped ~20bp on the week to 5.21%, highest since 2007. Blowout September flash PMIs (composite 58.4, strongest since mid-2021) plus surging input costs on $106+ Brent ended any dovish repricing — October hike odds jumped to 71% from 11% a month ago. A soft $70bn 5Y auction added fuel; Treasury kept the $6bn buyback ceiling, signaling no appetite to fight the tape.
Chart of the week:
Rates are doing the Fed's job and then some. The 10Y's break above 5% — now 5.21%, a 19-year high — is the market pricing a higher-for-longer regime that risk assets have yet to fully digest: the Nasdaq felt it Wednesday (-1.1%) while IG spreads sat at 27-year tights, a divergence that rarely lasts. With Q3 earnings two weeks out, the question is whether corporate earnings can grow into a 5%+ discount rate. If they falter, the all-clear in spreads starts to look mispriced. Macro picture murky.
🗓️ Upcoming Economic Data
Monday, 28 September 2026
• No major releases.
Tuesday, 29 September 2026
• US S&P/Case-Shiller Home Price Index (Jul).
• US Consumer Confidence (Sep).
• US JOLTS Job Openings (Aug).
• US Pending Home Sales (Aug).
Wednesday, 30 September 2026
• US ADP Employment Change (Sep).
• US Personal Income & Spending (Aug).
• US GDP: Q2 Third Estimate.
• US Chicago PMI (Sep).
Thursday, 1 October 2026
• US ISM Manufacturing (Sep).
• US S&P Global Final Manufacturing PMI (Sep).
• US Construction Spending (Aug).
• US Initial Jobless Claims.
Friday, 2 October 2026
• US Nonfarm Payrolls (Sep).
• US Unemployment Rate (Sep).
• US Factory Orders (Aug).
Next week’s calendar is stacked - ISM PMIs, JOLTS, and Friday payrolls will decide whether the October hike gets fully priced. With Q3 earnings season kicking off the following week, the rates-vs-earnings tension is the thing to watch.
Questions? Comments? Feel free to shoot over an email to [email protected].