Weekly Market Commentary: September 28 – October 2, 2026

Jobs Slump, Inflation Cools, Rate-Hike Odds Plunge – Yet Long-Term Yields Refused to Fall

This week delivered a rare combination: the labor market cooled, inflation came in softer than expected, and the odds of another Federal Reserve rate hike dropped sharply. Yet the long end of the Treasury market did not rally the way many investors might have anticipated.

What We Observed This Week

We observed the clearest sign of a cooling economy on Friday. The Bureau of Labor Statistics reported that employers added just 29,000 jobs in September, far below the roughly 84,000 to 90,000 economists had expected. The unemployment rate edged up to 4.2%, and revisions removed another 60,000 jobs from July and August combined. Average hourly earnings rose 3.0% over the past twelve months.

Inflation data earlier in the week pointed in the same direction. The Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) Price Index – the Fed’s preferred inflation gauge – rose 3.4% over the twelve months through August, while the core measure, which excludes food and energy, rose 3.0%. Both readings came in below economists’ forecasts, although both remain above the Fed’s 2% target.

Markets treated the data as a potential reason for the Fed to pause. According to CME FedWatch, as reported by Investopedia, the probability of a rate hike at the October 27-28 meeting stood near 23% after the jobs report, down from 28% before it. Stocks ended Friday higher, with the Nasdaq Composite touching a record intraday high and finishing the week up 0.5%, its third straight weekly gain. The S&P 500 slipped 0.3% for the week and the Dow Jones Industrial Average fell 1.3%, despite Friday gains of 0.7% and 0.5%.

The bond market told a more complicated story. The 10-year Treasury yield briefly dipped to 5.16% right after the jobs report, then retraced and approached 5.30% by late afternoon. On Thursday it had touched about 5.34%, its highest level since 2002. Brent crude oil also remained elevated, settling at about $102 a barrel on Friday. In short, softer data did not translate into lower long-term borrowing costs.

Long-term yields can stay elevated even when near-term Fed expectations ease. Persistent inflation above target, higher energy prices, and heavy borrowing demand are among the factors that may keep investors demanding more compensation for lending for ten years or longer.

What We Are Watching

We are watching three things in the weeks ahead:

• September CPI, scheduled for October 14. Will inflation continue to cool, or was August an outlier?
• The October 27-28 Fed meeting. A pause would mark a notable shift after September’s first rate hike since 2023.
• Whether the labor-market slowdown persists. Some economists noted that payroll counts can be distorted when Labor Day falls late in the month, so one report may not define the trend.

For long-term investors, the takeaway is perspective. A single data release rarely changes a well-constructed financial plan, and short-term interest rates and long-term interest rates can move for very different reasons. Staying focused on time horizon, cash-flow needs, and diversification tends to matter more than reacting to any one week of headlines.

Disclaimer: This content is for educational purposes only and does not constitute personalized investment advice or a recommendation to buy or sell any security. The information provided reflects general market commentary based on publicly available information and is not tailored to the financial situation of any individual. Investing involves risk, including the possible loss of principal. Past market performance is not indicative of future results. Guardant Wealth Advisors, LLC is a registered investment adviser. Registration does not imply a certain level of skill or training.