High Tide for Yields, Low Tide for Small Caps

Wednesday, October 7, 2026

The 10-year Treasury yield hit 5.35% this morning, its highest since 2002, and the 30-year touched 5.73%. Stocks backed off Tuesday's records. Small caps took the worst of it: the Russell 2000 fell 1.3% to 2,793.20. The S&P 500 slipped 0.2% to 7,801.77, the Dow lost 0.7% to 51,179.87, and the Nasdaq dipped 0.2% to 27,538.69, ending a five-day win streak. Then the 10-year auction came in strong, and the bond selling stopped. The 10-year finished around 5.28%, about where it started.

The tide went out on oil too. The government's weekly report showed crude inventories fell 3.2 million barrels when the street expected a 1.7 million barrel build. That should have helped crude. It didn't. Brent traded above $101 in the morning, then crude turned lower after the International Energy Agency moved to speed up its stock release, with diesel first. WTI settled at $88.28, down $1.16 and its lowest settle since August 31. The Fed minutes at 2:00 p.m. ET didn't change much.

Here's the day session by session, how this morning's call did, and the plan for Thursday.

The tape, session by session

Asia. Tokyo took profits at 70,000. The Nikkei fell 0.92% to 70,035.71 and held the big number by a hair. Hong Kong lost 0.62% and Korea about 0.9%. US index futures barely moved — ES sat in a 9.5-point box, 7,875 to 7,884.50. Crude was the mover, up to 90.61. Our board printed hourlies only: 30-year bond futures bullish 102.09375, silver bullish 61.4, Nikkei futures bullish 70405, copper bullish 6.6345.

London. Europe sold, and US yields climbed. That's when the index futures moved. ES dropped from 7,877.25 at the London open and NQ from 31,482. Within three minutes, about 11:07–11:10 p.m. Hawaii time, crude printed an