The biggest impact on the market last night was the surge in long-term bond yields, with US10y reaching 5.12% and US30y reaching 5.41%. The slight increase in oil prices was not the main factor driving the surge in long-term bond yields last night. The driving logic is: 1. Unexpected hot economic data S&P Global September PMI far exceeded expectations, indicating accelerated expansion of private sector activity in the United States: 1) The composite PMI rose to 58.4 (previously 56.0), the highest since July 2021 (a five-year high); 2) The service sector PMI rose to 58.7 (previously 56.5, expected to be around 56), the strongest in the past five years; 3) The manufacturing PMI rose to around 57.0 (previously around 53.9, expected around 53.6), the strongest in over four years. New orders (especially domestic demand) are strong, employment growth is the fastest in over four years, and backlog orders are increasing. However, input cost inflation has intensified due to soaring energy prices (the highest since October 2022), and supply chain pressures and insufficient production capacity have also pushed up prices. Data suggests that annualized growth in the third quarter may reach 4-5%. This makes the market believe that the economic resilience is too strong and inflation stickiness is difficult to dissipate, and the Federal Reserve needs to further tighten. Federal funds futures show that the probability of a 25 basis point interest rate hike in October has increased from approximately 53% the day before to 64% -73%. This is the direct catalyst for the surge in long-term bond yields last night; 2. Federal Reserve Governor Barr delivered a hawkish speech: Last week's interest rate hike was a "recalibration" of policy (previously a "deviation from stance"), with rising inflation risks and decreasing labor market risks. In the baseline scenario, "further policy adjustments are likely to be needed" to ensure that inflation falls back to the 2% target in a timely manner. Inflation remains above target and has not clearly declined. This strengthens the market's pricing for subsequent interest rate hikes. This is a secondary factor, The slight increase in oil prices is only the third weight. In the short term, strong data and hawkish rhetoric strengthen the narrative of 'higher and longer', and yields may remain high or be further tested: 1) Looking at the follow-up ISM data or further increase in oil prices, upward pressure still exists. 2) But if diplomatic progress eases energy premiums or signs of slowing growth appear, the yield on long-term bonds can truly fall back; The structural issues of long-term bond yields discussed in late August: https://(x.com)/qinbank/status/2090435324765970902? s=46&t=k6rimWsEbo2D2tXolYcM-A This article is sponsored by @ bitget_zh, "Bitget Buying US Stocks: Instant Entry, Smooth Trading