Finance Evening: Bond Sell-Off Lifts Treasury Yields to 24-Year Highs; Meta's Muse Tops App Charts

Source: NBC News

📊 Today's North American Markets

1. Global Bond Sell-Off Pushes U.S. Treasury Yields to 24-Year Highs

Yields on key U.S. Treasury bonds touched fresh 24-year highs on Wednesday, October 7, as the latest global bond sell-off picked up steam. The 10-year Treasury yield rose as high as 5.36%, and the 30-year Treasury yield hit 5.73% — the highest levels for each since 2002. Benchmark government bonds in France and Italy also rose sharply, and the yield on the U.K. 30-year government bond hit its highest level since 1998.

U.S. bond yields pulled back later in the day after the Treasury Department auctioned $39 billion worth of 10-year notes, for which there was strong demand. But at 5.3%, the yield on the auctioned bonds was the highest of any U.S. government sale of 10-year debt since November 2000. The bond rout had sent stocks tumbling early in the day, but as the decades-high yields eased, so did losses among the major stock indexes.

After notching record highs on Tuesday, both the S&P 500 and Nasdaq ended Wednesday down about 0.2%. The Dow fell 341 points, or 0.6%, and the Russell 2000 declined 1.3%. European markets saw steeper selling: the Stoxx 600 ended down 1%, while benchmark indexes in France and Germany closed down by around 1.3% and Italy's FTSE MIB slid 2.5%. Brent crude declined 0.5% but was still above $100 a barrel. Overnight, IMF chief Kristalina Georgieva warned that governments urgently need to bring their unprecedented debt under control.

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2. Inflation Fears Rise as One-Year Outlook in Fed Survey Hits Highest Since May 2023

Inflation fears intensified in September, pushing the near-term outlook in the New York Federal Reserve's monthly survey to its highest level in nearly 3 1/2 years. The Survey of Consumer Expectations showed the median view for inflation over the next 12 months rose to 3.9%, up 0.3 percentage point from August and the highest since May 2023, when the figure stood at 4.1%.

The survey also found that household spending growth is expected to reach 5.5%, also up 0.3 percentage point month over month and the highest since May 2023. The results come as Fed officials grapple over the proper setting of monetary policy while inflation holds well above the central bank's 2% target. Markets largely expect the Federal Open Market Committee to keep benchmark rates steady at its meeting later in October.

The survey found the outlook is better anchored further out: the three-year expectation edged up 0.1 percentage point to 3.3%, while the five-year view was unchanged at 3%. Market-based indicators, though, are less positive — a closely watched bond-market breakeven shows the five-year outlook around its highest level of the year at 2.35%. Surging energy costs are at the core of the problem: gasoline prices rose nearly 4% in August alone, while fuel oil jumped more than 10%.

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3. Oil Prices Climb Above $100 on Strait of Hormuz Attacks, Gulf Storm Threat

Oil prices rose on Wednesday amid increased attacks in the Strait of Hormuz and an incoming storm along the Gulf Coast. Brent crude traded back above $101 a barrel, while West Texas Intermediate crude was close to $90 a barrel.

Despite increased shipments through the Strait of Hormuz in recent weeks, UK officials have reported at least nine attacks in the critical waterway so far in October amid a continued U.S.-Iran conflict. Meanwhile, a tropical storm is nearing the Gulf Coast, threatening to make landfall as a hurricane by Friday. Chevron said it is evacuating nonessential personnel from its offshore platforms in the region.

Volatile crude costs, along with maxed-out refining capacity, have sent refined fuel prices surging. Gasoline averaged $4.36 a gallon on Wednesday, compared with $3.12 a year ago, while diesel stood at $6.30 a gallon. On Tuesday, President Trump said he is considering suspending the federal gas tax as the administration looks for ways to ease high energy costs ahead of November's midterm elections.

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4. Trump Wants the Fed to Rescue Him Ahead of the Midterms. That's Probably Not Going to Happen.

President Donald Trump has made no secret of his desire to exert control over the Federal Reserve's economic policy, with his primary demand being a rate cut. He seems to reason that this would give the economy a short-term jolt even if it causes longer-term pain. So after the central bank raised rates slightly in early September amid prolonged high inflation, the president was furious. "LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT," Trump wrote on Truth Social. He aired his displeasure again in a Sept. 28 interview with TIME Magazine, accusing the board of "Trump derangement syndrome."

Despite his agitating, experts told TPM he is unlikely to get what he wants from the Fed, which is set to vote on rates again on October 28. "I would be shocked if they cut rates at the moment, because [inflation is] still way above two percent," Gbenga Ajilore, chief economist at the Center on Budget and Policy Priorities, told TPM. "There's no universe where it would make sense to cut rates at this moment."

All 12 voting members of the Federal Open Market Committee decided unanimously last month that the first rate hike since 2023 was in order, with sticky inflation one reason. After last week's September jobs report showed continued weakness in the labor market, the odds of another October hike dropped from about 51% at the end of September to 19% as of Monday, according to CME FedWatch. But even if the central bank holds steady in October, experts said another hike is likely imminent. Historically high Treasury bond yields also likely pushed Fed members to act.

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5. Levi Strauss Hikes Profit Guidance After Tariff Refunds, but Sales Outlook Is Less Optimistic

Levi Strauss on Wednesday increased its profit outlook after receiving tariff refunds, but gave less rosy revenue guidance. The denim retailer raised its adjusted earnings per share expectation for the full fiscal year to between $1.54 and $1.56, from a previous range of $1.46 to $1.52. Analysts were expecting a range of $1.52 to $1.59, according to LSEG.

The company also lowered its full-year net revenue growth guidance to 7%, the bottom of its previously provided 7% to 7.5% range. Shares were roughly flat in extended trading after initially rising. For its fiscal third quarter, Levi saw a 4% increase in net revenues in the Americas, though U.S. revenue decreased 1%. It reported an operating margin of 13.8%, up from 10.8% a year earlier, with tariff refunds contributing 4.9 percentage points to operating and gross margin.

Levi said tariff refunds contributed a 16-cent benefit to earnings per share, of which 5 cents were "redeployed to support the business." On a call with analysts, CEO Michelle Gass said the money is going toward marketing and promotions during the holiday season. For the three months ending Aug. 30, Levi reported net income of $168.6 million, or 43 cents per share, down from $218.1 million, or 55 cents a year earlier. Sales rose about 4% to $1.61 billion from $1.54 billion.

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6. Meta's Muse Assistant Tops App Charts. Now It Needs to Become a Habit

Meta's Muse personal agent has been topping app store charts. Now the "centerpiece" of the company's artificial intelligence strategy, as CEO Mark Zuckerberg describes it, needs to become something people make a habit of using. The buzz has excited investors: the stock is up about 20% since the app launched a month ago and recorded its best month in September since 2022.

While Meta is still the top free app on Apple's iOS store, the bigger challenge is getting people to keep using Muse after the novelty wears off. Meta needs its personal agent to be an anchor app as the company trails competitors like OpenAI and Google in the red-hot AI market. "Muse has an opportunity to be sticky with consumers because it's a task-completer, rather than just a chatbot," Meredith Whalen, chief research officer at IDC, said in an email.

Whalen said it's unclear whether consumers will be willing to hand over the personal data needed to create an efficient digital assistant — a particularly big obstacle for Meta, which just agreed to an almost $17 billion settlement with a group of states that alleged it misrepresented child mental health harms caused by apps like Facebook and Instagram. "The real question is trust," Whalen said.

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7. Paramount and Warner Bros. Formally Merge, Carrying $82 Billion in Debt

Larry Ellison has succeeded in fusing Paramount and Warner Brothers in a $110 billion merger that will culminate in mass layoffs, higher prices, lower-quality product, and news outlets like CNN becoming even friendlier to corporate power and the U.S. right wing. The enshittification arrives despite endless promises by the Ellisons that none of these things are happening or will happen.

They've renamed the giant company Skydance. The bigger Skydance will be born with a giant weight tied around its neck in the form of $82 billion in debt. The Ellisons, who are heavily over-extended on AI, must manage that debt load while adapting to a quickly shifting entertainment industry. Reports note the challenges will pose a major test for Mr. Ellison, 43, who until last year had never run a public media company.

Critics argue gigantic "growth for growth's sake" mergers never end well, particularly when Warner Brothers is involved: from the 2000 superunion with AOL to AT&T's 2016 acquisition to Discovery's 2022 acquisition, every major deal resulted in mass layoffs and a worse overall product. Despite a last-ditch attempt by a coalition of 12 state AGs to enforce antitrust law, the opposition ultimately buckled under Ellison's threat to move Paramount out of California.

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8. U.S. 30-Year Mortgage Rate Hits Highest in Nearly Three Years

The interest rate on the most common U.S. home loan jumped last week to its highest in almost three years, worsening affordability for buyers four weeks before elections that will decide whether President Donald Trump's Republicans keep control of Congress. The average 30-year fixed-rate mortgage surged 19 basis points to 7.49% in the week ended October 2, the Mortgage Bankers Association said on Wednesday. It was last higher in November 2023.

Mortgage rates are tied closely to the yield on U.S. 10-year Treasury notes, which earlier this week hit a 24-year high, driven by worries over inflationary pressures from soaring oil prices and data showing stronger U.S. economic growth. The cost of living is the top issue on Americans' minds as they decide how to vote on November 3, a Reuters/Ipsos poll completed on Monday showed, and is one reason Trump's approval rating is at a record low of 32%.

Home borrowing rates are up about 1.4 percentage points since joint U.S.-Israeli strikes against Iran began in late February, tracking a similar rise in the 10-year Treasury yield. Inflation registered 3.4% in August by the measure the Fed targets at 2%. Fed policymakers have signaled they expect another rate hike by year's end after their September increase. Asked about mortgage rates Wednesday, Trump called Fed chairman Kevin Warsh "great" but added other board members "would like to see the country do badly."

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9. Used Car Prices Fall in Q3 as High Gas Prices and Inflation Bite

Used vehicle prices are forecast to fall more than previously expected this year, as high gas prices and broader inflationary costs hit Americans' pocketbooks. Cox Automotive on Wednesday lowered its forecast for the Manheim Used Vehicle Value Index from a 2% increase to a rise of only 0.2% for the year — marking the third consecutive year of relatively flat pricing after large pandemic-era increases and then declines.

The lower forecast follows a 1.95% decline in the index from July to September, including a 0.6% drop in September compared with a year earlier — the first time since March 2025 that the monthly index hadn't been higher year over year. "As we enter Q4, interest rates are rising, consumer sentiment is falling, and yet a wealth effect from strong and sustained financial-asset growth is providing some offsetting cushion," Cox Automotive chief economist Jeremy Robb said in a release. The historical average for the index is about a 2.3% year-over-year gain.

Cox noted that EV sales and off-lease volume continued to grow, reshaping the used market: values of EVs and smaller, fuel-efficient vehicles increased during the quarter, while large trucks and SUVs performed poorly. The national average gas price in September was $4.33 a gallon. As of August, the average listed price of a used vehicle was $27,239, compared with more than $50,000 for new vehicles.

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10. Walmart Expands Drone Delivery to Seattle and Denver

Walmart and Alphabet-owned Wing are expanding their drone delivery service to the Seattle and Denver metro areas next year, bringing the service to nearly 20 major U.S. markets. The expansion is part of the companies' plan to offer drone delivery from more than 270 Walmart stores nationwide, according to an announcement Monday from Wing. "Adding new metros to our expansion speaks to how quickly people across the country are adopting drone delivery," Wing chief business officer Heather Rivera said in a statement.

The partnership already provides drone delivery access to more than 3 million customers in markets including Dallas-Fort Worth, Atlanta, Houston and Orlando. Wing noted the expansion into Seattle and Denver will bring the service to a wider range of weather conditions, from Pacific Northwest rain to Colorado winters. "Expanding drone delivery to Seattle and Denver is about giving more customers a practical option when they need something quickly," said Greg Cathey, senior vice president of eCommerce Transformation at Walmart.

Wing's drones can fly up to 60 mph and carry packages weighing up to 5 pounds. Customers can order tens of thousands of Walmart products — including groceries, electronics and over-the-counter medications — for delivery in minutes. The expansion comes as major retailers ramp up drone delivery.

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