The 10-year had its biggest jump in 18 months, to 5.11%

The ten-year rose 15bp to 5.11%, its highest close since 2007, the five-year 16bp and the two-year 14bp to 4.85%. Four things landed on it at once: the flash PMIs, a Fed governor arguing for more hikes, a weak auction and firmer oil. Treasury sold $70bn of five-year notes at 5.033%, 3.1bp above where they were trading beforehand, against a six-auction average tail of 0.6bp, and foreign and fund buyers took 54% against a usual 65%. WTI settled near $92.5, up 2.1%.

A week after the first hike since 2023, Governor Michael Barr said "further policy adjustments are likely to be needed" and that the Fed had been "out of position." He added that risks to inflation have increased while risks to the labour market have receded. The same morning, S&P Global's flash composite PMI jumped to 58.4 from 56.0, manufacturing to 57.0 from 53.9 and services to 58.7 from 54.6. Output is growing at the fastest pace in more than five years, and input costs at the fastest in about four.

McDonald's fell 4.81% to $238.32 after setting out $8.5bn of franchisee support through 2036, in rent relief and capital, alongside a target of about 250bp of restaurant-level efficiency gains. The spending starts now and the payoff runs over a decade, and Wendy's and Yum barely moved, so the market treated it as a McDonald's problem rather than a sector one. It closed at its lowest level since October 2022.

The S&P fell 0.75%, the Nasdaq 100 0.85% and the Dow 0.68%, while the Russell 2000 dropped 1.77%. The VIX rose 6.8% to 15.18. Blackstone fell 3.84% and Ares 2.62% with no company news dated today.