The Overnight RateBagehot’s rapid rise took about a month this time. The 10-year went from 4.79% on Sept. 1 to 5.31% Monday, and on Tuesday it gave back four hundredths while the stock market set a record.
- Tuesday’s issue said a trade deficit over $110 billion or under $90 billion would be news. Census and BEA printed $105.6 billion for August, up from a revised $92.8 billion in July, with imports up 4.3% and exports up 1.4% (BEA). Inside the band, a few billion over the $102 billion consensus. Importers paid $420.8 billion for the month’s goods and services; whatever tariff applies rides inside that figure.
- The S&P 500 closed at 7,818.93, up 0.58%, its first record close since Aug. 13. The Nasdaq rose 0.45% to 27,599.89 and the Dow 0.49% to 51,521.28 (Yahoo Finance). The August record came with the 10-year at 4.63%. Tuesday’s came with it at 5.27%, down from Monday’s 5.31% (Treasury). An October hike is 15% on Kalshi this morning and December 71% (Kalshi). I’d argue stocks are pricing the hikes that aren’t coming and ignoring the yield that already did.
- Treasury sold $58 billion of 3-year notes Tuesday at 4.932%, up from 4.474% at the September sale a month earlier, with bids covering the offering 2.62 times (TreasuryDirect). Mortgage News Daily’s average 30-year quote fell to 7.56% from 7.61% (Mortgage News Daily). Junk-rated companies paid 8.15% to borrow Monday, with the spread over Treasuries at 3.12 points, a hair wider than Friday (FRED, FRED).
Threshold: 1:00, 2:00, 3:00
Treasury auctions $39 billion of 10-year notes at 1:00 ET (TreasuryDirect). The last 10-year sale, Sept. 9, stopped at 4.834%, the highest in the five years of results Treasury posts online. With the market at 5.27%, news is a stop above 5.30%, which would mean buyers demanded a concession, or under 5.20%, which would mean they lined up.
At 2:00 the Fed releases the minutes of the Sept. 15-16 meeting that hiked a quarter point on a 12 to 0 vote (Fed). News is any count of participants who wanted to hold, or who wanted a half point.
At 3:00 the G.19 covers August consumer credit. July’s revolving balances, mostly cards, grew at a 2.5% annual rate after 4.9% in the second quarter (Fed G.19). News is revolving credit above 6% or shrinking.
Who pays: the revolving balance
Americans owed $1,357.2 billion on revolving credit in July, mostly cards (Fed G.19). The Fed’s last annual average rate on card accounts that pay interest was 22.32%, for 2025; it has published no 2026 figure. Most card rates are written as prime plus a margin, and prime has been 7.00% since Sept. 17 (FRED), so the September quarter point reaches those accounts on the next statement cycle.
The mechanism, once: the Fed moves the overnight rate, prime moves the same day, and a variable-rate card moves on the next cycle. The reference household’s $6,000 card balance at 22.32% costs about $1,339 a year in interest. The quarter point adds about $15 of that.
Payer: the household carrying a balance into the new cycle. Payee: the issuer’s interest line. I’d watch the 3:00 revolving number before the minutes; one is three weeks old and the other is this month’s bill.
Net net: $1.36 trillion of revolving debt reprices one statement after the Fed does. The 3:00 print says whether households are adding to it at 22%.
Headlines
- An Iran-Oman agreement on Hormuz shipping by Oct. 31 is 16% on Polymarket, from 19% Tuesday morning; ship traffic back to normal by Dec. 31 is 18% (Polymarket). Diesel is $6.30, down 11 cents in a week and up 40 cents in a month; regular is $4.37 (AAA).
- Polymarket’s 2026 hike count as of Tuesday night: one 24%, two 68%, three 10% (Polymarket). Counting September, that is about 79% for at least one more hike and roughly 11% for two more. Recession by year-end is 7%.
- Treasury follows with $22 billion of 30-year bonds Thursday at 1:00 (TreasuryDirect); the 30-year closed Tuesday at 5.64%. Freddie Mac’s weekly mortgage average prints Thursday at noon from 7.28% (Freddie Mac).
Auction at 1. Minutes at 2. Cards at 3.