# US payrolls rose just 29,000 in September, pulling Treasury yields off a 24-year high

Traders moved to price in a Federal Reserve pause this month, the Nasdaq Composite closed higher, and gold fell for a second straight week.

- Published: 2026-10-03T05:22:27.492Z
- Canonical: https://polylog.news/2026-10-03/us-payrolls-rose-just-29-000-in-september-pulling-treasury-y
- Publisher: Polylog (Global desk)
- Section: macro
- Sources: [Economic Times](https://m.economictimes.com/markets/us-stocks/news/ai-earnings-shield-us-stocks-but-bond-risks-rise-jefferies-wood/articleshow/134650285.cms), [CNBC](https://www.cnbc.com/2026/10/02/jobs-report-september-2026.html), [Yahoo Finance](https://finance.yahoo.com/markets/live/stock-market-today-friday-october-2-dow-sp-500-nasdaq-september-jobs-report-080623878.html), [Business Recorder](https://www.brecorder.com/news/40442314/gold-slips-before-us-payrolls-data-set-for-second-weekly-loss)

US nonfarm payrolls increased by 29,000 in September, well below the 84,000 economists expected, and revisions removed 60,000 jobs from the previous two months, [CNBC reported](https://www.cnbc.com/2026/10/02/jobs-report-september-2026.html). The unemployment rate rose to 4.2% as more people entered the labour force, and average hourly earnings were up 3.0% over twelve months.

The bond market reacted first. The 10-year Treasury yield fell about 7 basis points to 5.175%, pulling back from a peak above 5.34% earlier this week, which [data from Trading Economics](https://tradingeconomics.com/united-states/government-bond-yield) show was the highest level since 2002. Equities rose as traders reduced the probability of another increase when the Federal Reserve meets later this month, after Federal Reserve Chair Kevin Warsh delivered the first rate rise since 2023 in September. The S&P 500 closed up 0.73% at 7,722.72, and the Nasdaq Composite gained 1% to [close at 30,808](https://finance.yahoo.com/markets/live/stock-market-today-friday-october-2-dow-sp-500-nasdaq-september-jobs-report-080623878.html).

Gold and silver did not rise with equities. Spot gold slipped 0.6% to $4,154.78 an ounce and was down more than 3% for the week, a [second consecutive weekly loss](https://www.brecorder.com/news/40442314/gold-slips-before-us-payrolls-data-set-for-second-weekly-loss) driven by a dollar near a 17-month high and by Treasury yields that now offer competitive returns. Silver traded near $61 an ounce. Bitcoin rose about 2.9% over 24 hours to roughly $86,200, tracking equities rather than the metals.

Christopher Wood, global head of equity strategy at Jefferies, argued that earnings tied to artificial-intelligence capital spending have kept US share prices from falling along with Treasury bonds, even as [credit risk increases](https://m.economictimes.com/markets/us-stocks/news/ai-earnings-shield-us-stocks-but-bond-risks-rise-jefferies-wood/articleshow/134650285.cms) in parts of the market that have not yet shown up in stock prices. He maintains that Group of Seven government bonds have entered a structural bear market, and notes that the artificial-intelligence buildout is increasingly financed with debt rather than cash.

## What this means

Weak hiring normally pulls down yields across the curve, but this time long-term rates are being driven more by Treasury supply and inflation expectations than by the labor market, so the weak September report lowered the 10-year yield by only 7 basis points. The exposed parties are leveraged borrowers: the AI buildout that Wood says has shifted from cash to debt financing, high-yield issuers whose spreads have started to widen, and governments refinancing debt at rates above 5%. Equity holders benefit in the short term because a Federal Reserve pause removes an immediate threat to stock valuations. The precedent is 2022 and 2023 in the United Kingdom and Japan, when those countries' central banks slowed the pace of tightening while long-term yields kept rising until fiscal plans changed. The likelier outcome over the next few months is a Federal Reserve pause while 10-year and 30-year yields stay near multi-decade highs, which keeps raising the hurdle rate (the minimum return an investment must clear to get funded) for AI capital spending even as corporate earnings hold up. A sustained drop in long-term yields, driven by a credible plan to reduce Treasury issuance or by a sharp fall in oil prices, would contradict this forecast.

## What to watch

- Whether high-yield corporate spreads keep widening while equity indices remain near their highs, which would indicate that credit investors are pricing the AI buildout differently than equity investors.
- The size and composition of upcoming Treasury auctions, because the supply of long-dated bonds is now doing more to set yields than Federal Reserve guidance is.
- Whether gold stabilizes or keeps falling as yields stay above 5%, a test of how much of this year's demand for gold came from interest-rate expectations rather than from central-bank and reserve buying.