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Perspective: Mid-Day Commentary for October 2

By: Mike Castle, Market Intelligence - Fertilizer Analyst

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October 2 – The Nasdaq surged to another fresh all-time high this morning and remains up roughly 1% on the day at the time of writing, while the S&P 500 is up 0.65%, and the Dow Jones is up 0.3% as equities breathe a sigh of relief on falling rate expectations. The VIX has bounced from its morning lows but remains notably lower, hovering near 15.8 at midday. The dollar remains in the red as well, albeit still notably elevated after breaking above 102 for the first time since April 2025 yesterday, trading near 101.88 at present. Interestingly, Treasury yields have risen through the session to now sit higher on the day, with 2-year yields at 4.806%, 10-year yields at 5.252%, and 30-year yields at 5.613%. Crude oil prices remain notably lower but also off the morning lows, with nearby WTI down 3.1% to trade near $90 and nearby Brent down 1.6% to trade just below $100.70. The ags remain quietly mixed, mostly in the red at the time of writing.

French President Emmanuel Macron announced that G7 leaders have agreed to move forward with the proposed release following their virtual meeting today, noting that the group would like to trigger a drop in global fuel prices. The official G7 statement notes a total planned release 100 million barrels to begin immediately over four months, including a “frontloaded substantial diesel release within the first 20 days by G7 members and partners. It’s not spelled out in the official statement, but my expectation is that this would follow the previously proposed French plan to release 50 million barrels of diesel and 50 million barrels of crude oil from emergency reserves. Macron, who is the current chair of the G7, was quoted by Bloomberg as stating: “we have all committed together to releasing these strategic reserves in the proportions I mentioned, with a focus on diesel, and we are all committed to ensuring there are no export bans, and President Trump, in particular, was very clear on this point.” The move could represent a material reprieve to near-term supply, with energy prices falling sharply in response. Coupled with today’s modestly dovish U.S. macroeconomic data, the cooling of energy prices is helping to ease fears of the most hawkish scenarios playing out, though it’s worth noting that there is already a considerable build-up in price pressures at the producer level currently, with the market waiting to see the expected pass-through to the consumer level. For now, though, the market is happy to focus on the positives.

Headline U.S. factory orders rose 0.1% month-on-month in August, in line with expectations, a drop from the downwardly revised 0.8% rise in July. Excluding transportation, however, factory orders rose a stronger 0.3% month-on-month, with July being revised higher to show a 0.7% increase from the 0.6% previously reported. Stripping this back further, strength was concentrated in non-defense capital goods excluding aircraft (+1.6% in August), while the principal drag remained from transportation equipment, particularly aircraft-related orders, along with softer defense demand. Interestingly, the standout declines were seen in defense communications equipment (-7.3%), non-defense aircraft and parts (-4.3%), and household appliances (-3.1%). Ex-transportation orders continued to advance, however, suggesting U.S. capital spending trends remain firmer than the headline print implies.

Average hourly earnings for all employees on U.S. private payrolls rose by 3.0% year-over-year in September, down from the 3.1% rise in August and below the average analyst estimate of a slight uptick to 3.2%. This is the lowest increase in average hourly earnings seen in over five years, dating back to May 2021. From the Fed perspective, this points to softer-than-expected inflationary pressures from wages, providing the doves another boost as the most hawkish rate expectations soften. From a U.S. consumer perspective, however, this likely sets the stage for a sixth consecutive month of negative real wage growth—i.e. inflation outpacing wage gains. This is the longest such streak since the 25 consecutive months seen from April 2021 through April 2023.

While the headline unemployment rate rose to 4.2%, the broader U-6 unemployment rate fell to its lowest level since January 2025 at 7.6%. This is the category that includes the headline unemployed numbers, plus marginally attached workers, and those employed part-time for economic reasons. For context, the U-6 unemployment rate hit a four-plus year high of 8.7% last November and averaged 7.98% in the first eight months of 2026. Also encouraging was the uptick in labor force participation, with the civilian labor force growing by 485k month-on-month, bringing the participation rate to a four-month high at 61.8%, a second consecutive monthly increase after bottoming out at a five-and-a-half year low of 61.4% in July. All in all, this morning’s data has softened expectations for the Fed’s next rate hike notably, with CME’s FedWatch now showing the market pricing in odds of a 25-basis point at only 21.6%, dramatically below the 70%+ seen to start the week and marking the lowest level seen since early September, predating the Fed’s most recent 25-basis point hike last month.

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Perspective: Mid-Day Commentary for October 2

October 2 – The Nasdaq surged to another fresh all-time high this morning and remains up roughly 1% on the day at the time of writing, while the S&P 500 is up 0.65%, and the Dow Jones is up 0.3% as equities breathe a sigh of relief on falling rate expectations. The VIX has bounced from its morning lows but remains notably lower, hovering near 15.8 at midday. The dollar remains in the red as well, albeit still notably elevated after breaking above 102 for the first time since April 2025 yesterday, trading near 101.88 at present. Interestingly, Treasury yields have risen through the session to now sit higher on the day, with 2-year yields at 4.806%, 10-year yields at 5.252%, and 30-year yields at 5.613%. Crude oil prices remain notably lower but also off the morning lows, with nearby WTI down 3.1% to trade near $90 and nearby Brent down 1.6% to trade just below $100.70. The ags remain quietly mixed, mostly in the red at the time of writing.

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