Major US stock indexes red; Nasdaq off the most, down ~1%
Consumer Discretionary is the weakest S&P 500 sector; energy leads the gainers
Euro STOXX 600 index off ~0.3%
Dollar rallies ~0.5%; US crude gains >1.5%; gold down ~1.5%; bitcoin off >2%
US 10-year Treasury yield rises to ~5.06%, hits fresh multi-decade high
Business activity and mortgage rates
Halfway through the week, and data geeks finally get tossed some meat to chew on.
Starting with S&P Global's advance "Flash" purchasing managers' indexes (PMI), business activity in the U.S. expanded at an unexpectedly accelerated pace so far this month.
The manufacturing side USMPMP=ECI added 3.1 points to a tidy 57.0, instead of inching lower to 53.6 as analysts expected.
The services sector USMPSP=ECI likewise pressed the accelerator instead of the brakes, gaining 2.2 points to 58.7 compared with the 56.0 consensus.
Taken together, the composite measure USPMCF=ECI gained momentum, rising to 58.4 from 56.0, and logging its fastest pace since April 2022.
All three PMI readings are comfortably north of 50, the dividing line between contraction and expansion.
New orders gathered steam, reaching more than four-year highs in both sectors. Operating capacity tightened and employment improved.
However, input prices—an inflation predictor—notched their hottest reading since October 2022.
"US business continues to boom, with output growing at the fastest rate for over five years," writes Chris Williamson, chief business economist at S&P Global Market Intelligence. "However, this growth is being accompanied by some of the most severe supply chain bottlenecks seen in the near-two-decade survey history if the pandemic is excluded."
"Firms’ input costs have meanwhile jumped in September at the steepest rate for four years," Williamson adds.
Meanwhile, mortgage rates hit their highest level in over two years, to the chagrin of would-be borrowers, according to the Mortgage Bankers Association (MBA).
The average 30-year fixed contract rate USMG=ECI—which tends to rise and fall in tandem with benchmark Treasury yields—jumped 16 basis points to 7.12%, breaching the 7% mark for the first time since January 2025.
As a result, demand for loans to purchase homes USMGPI=ECI—among the housing market's most forward-looking indicators—softened 0.8%. But refi demand USMGR=ECI, representing a diminishing 39.3% of the mortgage pie, dropped by a more significant 2.6%.
Taken together, mortgage demand strengthened by 1.5%.
"Applications for both refinance and purchase loans declined further last week, noting that the comparison is to the week that included the Labor Day holiday," writes Mike Fratantoni, MBA’s chief economist. "With this week’s decline, the pace of refinancing fell to its slowest pace since February 2025."
The 30-year fixed rate is currently 78 basis points hotter than it was during the same week a year ago.
Over that same period, purchase applications have dipped 11.2%, while refi demand slid 62.0%.
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