Last week the bond market gave a tidy answer. The hike was a front end event.

This week the long end moved.

The thirty year yield hit its highest level since 2004. Mortgage rates crossed 7%. The index barely flinched. The average stock did.

Monday, Meta (META) jumped 12.5% and the Nasdaq closed at a record.

Tuesday, Brent fell for a fifth day on reports of an Iranian Hormuz offer. Wednesday, a hot business survey and a soft auction sent the ten year up 15 basis points. Thursday, Brent settled at $106.60 after missiles targeted a Saudi oil port, and Oracle (ORCL) filed a delay notice. Friday, oil eased and long yields rose anyway.

As of about 11:25 a.m. Eastern Friday, the S&P 500 was up just under 1% for the week. The Nasdaq Composite was up about 1.8%. The Dow was slightly lower. The Russell 2000 was down 0.9%. The VIX traded at 15.33, from 14.81 last Friday.

Six themes ran the tape.

The long end took its turn.

Last Friday, Treasury's curve put the two year at 4.76%, the ten year at 5.01% and the thirty year at 5.34%. By Thursday's close they stood at 4.87%, 5.18% and 5.47%.

Last week the two year took 13 basis points and the thirty year took none. This week the thirty year rose 13 through Thursday, outpacing the two year. Late Friday morning it traded near 5.52%, with the ten year near 5.21%.

Wednesday, Treasury sold $70 billion of five year notes at 5.033%, the highest five year auction yield since 2006. On Thursday it offered to buy back up to $6 billion of long bonds. Holders offered $10.47 billion. Treasury took $4.08 billion.

Part of the selling was forced. Traders who bet long yields would outrun short ones got caught as hike bets lifted short yields too.

The Read

Last week we called this a policy cycle, not a debt problem. That call got weaker. Forced selling ends once positions clear. If the thirty year stays above 5.5% after that, the trade was never the problem.

The case for another hike stopped needing oil.

On Wednesday, S&P Global's flash composite rose to 58.4 from 56.0, with the fastest hiring since June 2022. Then Governor Michael Barr said "further policy adjustments are likely to be needed."

Thursday, jobless claims fell to 197,000. Richmond's Tom Barkin put AI spending next to gas prices and tariffs as reasons inflation is lasting.

Futures put October hike odds near 70% Wednesday, from under 10% a month ago. The dollar logged its best 11 day run since the war began. Gold futures were down about 2.6% on the week by late Friday morning.

The Read

Last Saturday we said the Fed now sees a demand problem. This week the data agreed. Fuel can get cheaper with a peace deal. Data centers take years to build. That reason to stay tight does not depend on crude.

Talks moved oil for minutes. Barrels moved it for the week.

Brent slipped under $100 Tuesday night after the first direct US-Iran meeting since June. By Wednesday afternoon it was back above $101, after an armed group shut Libya's largest oil field.

On Thursday, the Saudi-led coalition said it shot down six missiles aimed at Taif and Yanbu, the Red Sea port where its bypass pipeline ends. Then word spread of a phased plan to reopen Hormuz. Brent fell $2.80 in five minutes. It still settled at $106.60. The ten year barely reacted.

Only 11 ships crossed Hormuz on Wednesday. WTI settled Thursday near $94.60, about $12 below Brent.

Watch Signal

Headlines now fade in minutes. Transits do not. A real first stage shows up in ship counts before it shows up in a signed text. Until then, Brent keeps its premium.

The index went up. The typical stock went down.

AMD crossed a $1 trillion value on Monday. Meta was up about 13% for the week at Friday's cutoff, even after a 3.5% drop that day.

By Thursday, the Invesco QQQ Trust (QQQ) led the equal weight S&P 500 fund by about three points for the week. Late Friday morning, QQQ was up about 3% and the Invesco S&P 500 Equal Weight ETF (RSP) was down about 0.8%.

On Wednesday, 51% of S&P 500 members traded below their 200 day averages while the index sat 7.4% above its own.

The Read

Higher yields did not hit the index. They sorted it. The names tied to AI rose through a 5% ten year. Much of the rest did not. Our Tuesday breadth warning held up.

The AI build-out met the cost of money.

On Thursday, Oracle served a force majeure notice on the developer of Project Jupiter, its New Mexico data center. The clause lets it delay payment if the site runs late. The site's $18 billion loan already traded below 90 cents. Oracle fell about 4% and says the project is on schedule.

The same day, SoftBank sold about $11.1 billion of bonds. About nine of every ten dollars go to one OpenAI payment.

After Thursday's close, Akamai (AKAM) announced a seven year, $11.6 billion computing deal with Anthropic, with about $5.5 billion of related capital spending. The stock opened about 14% higher Friday and was up about 7% at the cutoff.

Watch Signal

Demand for compute is not in doubt. The bill for building it is, and the ten year sits above 5%. Watch the Jupiter loan. If it keeps sliding, the next project pays more to borrow.

The household started paying the long end.

The average 30 year mortgage rate rose to 7.03%, its first print above 7% since early last year.

Wednesday, McDonald's (MCD) said flat traffic is "the environment", not a phase. The stock fell about 5.7% to its lowest since October 2022. General Mills (GIS) said its cost inflation should climb from 4% to 6% by its fourth quarter. Thursday, Darden (DRI) met forecasts, held its outlook and still fell.

Costco (COST) beat on every headline line, with comparable sales up 6.7% ex gas and currency. The stock was up about 2% at Friday's cutoff.

The Read

The consumer is not breaking. It is sorting. Costco's members still spend. McDonald's customers are not coming more often. The next traffic numbers show whether that split widens.

Here is what the week settled.

The long end joined the selloff. It moved through a weak auction, a buyback that fell short and forced selling. The case for an October hike now rests on hiring and demand, not oil. And the index leans on AI names while the rest lag.

Our Xi call held. The truce now runs to January 10, which moves the date and settles nothing.

Here is what the week did not settle.

Hormuz is still shut to normal traffic, and the talks have no text. Nobody knows how much of the bond selling was forced. And the typical stock has not shown it can live with a 5% ten year.

Last week the long end sat still. This week it set the price.