Bond yields fall despite hottest wholesale inflation since 2022 as AI fears take over

The 10-year Treasury yield dropped 0.10 points to 5.09% even after September producer prices jumped 1.3%, as markets read shrinking AI-funding capacity as a growth shock and the S&P 500 clawed back to close up 0.33% at 7,744.

Deepakshi

Kristal Research & Marketing team

16 Oct

Key takeaways — AI summary

The producer price index rose 1.3% in September versus the 0.5% expected, the biggest monthly jump since March 2022, lifting the yearly rate to 6.3%; yet the 10-year Treasury yield fell about 0.10 points to 5.09%, its biggest one-day drop since February.
Markets cut the odds of an October Fed rate hike to roughly 30% from about 50%, per CME FedWatch, as bond buyers prioritised fears of an AI-led slowdown over inflation.
AI anxiety hit chipmakers: semiconductor stocks fell for an eighth straight day (their longest run since 2015), and Reuters reported investors now discuss a $1.5 trillion valuation for Anthropic's November listing, down from about $2 trillion, after Q3 revenue rose 45% to $16.8 billion.
US stocks recovered from a weak open — the S&P 500 rose 0.33% to 7,744 after bouncing off its 50-day average; health care gained 1.84% to a record while energy (-1.55%) and technology (-0.54%) lagged. Asia had whipsawed, with Korea's Kospi down 7.5% and Japan's Nikkei nearly 5% overnight.
WTI crude rose $2.60 (+2.77%) to $96.50 after an 8.6-million-barrel stockpile draw and a ship sinking in the Strait of Hormuz; Brent eased to $105.92 and gold held above $4,100 at 4,172.

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