10-year tops 5.1%, with an October hike coming into view

Good morning. The US 10-year Treasury yield jumped as high as 5.14% during the session, the highest since July 2007 and its biggest one-day rise in over a year. The 30-year fixed mortgage rate rose to 7.12%, and more borrowers are turning to adjustable-rate loans.

The reason yields jumped is that the economy looks too strong. September S&P Global PMIs showed the fastest business expansion in more than four years along with hot prices, and a hawkish remark from a Fed governor added fuel. Markets now put the odds of an October hike above 70%. Some even worry that 5% is merely a stop on the way to 6%.

Stocks backed off from record territory. The Dow fell 352 points, or 0.68%, to 51,511. What is more troubling is how narrow the advance is. Days when more stocks hit 52-week lows than highs have occurred only five times since 1990, and this was another. The market is leaning on a few AI giants more than at any time since the dot-com peak.

On energy, diesel is the headache. After President Trump backed a ban on diesel exports, European diesel futures jumped, and US senators asked for an emergency release of heating oil reserves. The US and Iran met for three hours at the UN, but Iran says it won't allow Hormuz transit while sanctions stay in place.