U.S. 10-year Treasury yield climbs to 5.36% before cooling to 5.28%; major New York indices retreat.
Robust 10-year auction and decline in oil prices soothe rate jitters; local market focus shifts to Samsung Electronics earnings and options expiry.
Market Overview
① Yields surge on Treasury supply, then stabilize after 10-year auction
U.S. stocks faced selling pressure from the open amid concerns over a heavy slate of Treasury issuance. Following a $58 billion auction of three-year notes the previous day, the U.S. Treasury sold $39 billion in 10-year notes, with a $22 billion offering of 30-year bonds scheduled for the following day.
With approximately $120 billion in supply hitting the market over three days, the 10-year yield briefly pierced 5.36%, while the 30-year yield pushed past 5.73%.
However, yields retracted from their highs after the 10-year auction drew a bid-to-cover ratio of 2.77, exceeding the previous month's 2.71. This is the highest ratio since 2016, signaling strong appetite for sovereign debt at current yields.
The FOMC minutes also provided some relief, as the Fed's stance on keeping the door open for additional hikes was interpreted as a data-dependent approach, capping further upward pressure on rates.
② Oil prices slide 1.3%, easing rate-related anxiety
International oil prices initially jumped on geopolitical tensions involving Iran but reversed course following reports of increased supply.
The IEA announced it is prepared to tap into emergency stockpiles if necessary, which deepened the decline in crude prices. Saudi Arabia also signaled plans to increase oil exports via pipelines and tankers.
As WTI crude fell 1.3%, the U.S. 10-year Treasury yield retreated from its intraday peak to settle around 5.28%.
③ NVIDIA and Tesla decline, while Micron surges 4%
High interest rate burdens weighed on major tech stocks, including NVIDIA, Meta, and Tesla. While markets have recently climbed to record highs, critics point out that gains have been narrow, with index performance heavily reliant on a few "Big Tech" names.
Conversely, Micron shares rose 4% on an optimistic outlook suggesting memory supply shortages could persist through 2028. Prospects for long-term contract expansion and ongoing supply tightness continue to sustain a positive view on the memory sector.
Market Commentary
U.S. markets opened lower due to Treasury supply concerns, but recovered toward the end of the session as yields retreated from their highs. Stronger-than-expected demand at the 10-year auction and falling oil prices helped alleviate some of the upward pressure on interest rates.
For the domestic market, the confluence of Samsung Electronics’ earnings announcement and the options expiry date remains the primary headwind. Since the positive earnings outlook for Samsung has already been largely priced into the market, investor focus will likely shift toward the sustainability of this improvement rather than the headline numbers.
Memory producers such as Micron and Samsung continue to emphasize the expansion of long-term contracts and the potential for prolonged supply shortages. Despite recent concerns regarding a peak in the memory cycle, the underlying performance environment remains robust.
The volatility in early October has been exacerbated by the expiry schedule and the completion of share buybacks by companies like Samsung Electronics and SK hynix. It is worth observing whether the current supply-demand imbalance subsides after the options expiry and if expectations for earnings growth and further shareholder returns gain renewed traction.
Key Checkpoints
Samsung Electronics: Markets will look past the preliminary earnings figures to gauge the sustainability of performance improvements.
Options Expiry: Whether the volatility observed in early October stabilizes post-expiry.
Semiconductors: How the domestic market reacts to Micron’s 4% rally and the broader outlook for memory supply shortages.
U.S. Treasury Yields: Whether the 10-year yield, having cooled from 5.36% to 5.28%, will continue to stabilize.
Market Indicators
Dollar Index: 102.28 (+0.44%)
International Oil Price (WTI): $88.28 (-1.30%)
VIX Index: 15.08 (+0.47%)
U.S. 10-year Treasury Yield: 5.28%
MSCI Korea Index: -1.45%
Overnight Futures: Flat
Source: Sihwangman’s Stock Story (t.me/shmstory)
YouTube: Sihwangman TV www.youtube.com/@blueoak1004
This article is a restructured summary of a Telegram post by "Sihwangman’s Stock Story" published with the author’s consent. Content may contain errors and does not constitute investment advice; it should not be used as the basis for trading decisions. Under no circumstances can the contents of this post be used as legal evidence.
