Investment Insights — Week of September 28, 2026

Hi, I'm Tim Gereg, Head of Capital Solutions at Texas Capital.

Last week, we had a broad, sharp selloff in the U.S. interest rate market with rates higher across the curve. The two-year rose 11 basis points to 4.85%, while the 10-year rose 16 basis points to 5.16%, its highest close since 2007. The 30-year touched 5.53% on Friday, its highest since 2004, and 30-year mortgages are now squarely in 7-handle territory. The shape of the curve shifted materially as well, as 2s10s was down to 18 basis points on Wednesday, the flattest since February of 2025. But by Friday we steepened to back over 30 basis points.

The bulk of last week's move came on Wednesday after PMI data came in much hotter than expected, and hawkish Fed speak, where Fed Governor Michael Barr, historically relatively neutral, said "further policy adjustments are needed in order to bring down inflation." We also had a very weak five-year Treasury auction on Wednesday, which tailed over three basis points and priced above 5% for the first time since 2007.

For the past several months, oil has been a key driver of front-end rates, with the two moving close to lockstep. But that correlation broke down recently from a purely technical perspective. Since the day before the Fed meeting September 15th, WTI hit a recent high of $106 but ended last week down around $92. Two-year Treasury rates, however, are 26 basis points higher since that day, up to 4.94 as of this morning. To be sure, oil is absolutely still a key contributor to front-end rate moves. But the takeaway here is that even as oil has sold off a bit, the market views the impact of higher oil and refined products as adding upward pressure to inflation that is unlikely to be unwound for many months. Case in point, diesel prices are still sitting at record highs over $6.50 a gallon, which has a direct impact on the price of core goods. 

With respect to the war, U.S. and Iranian negotiators met directly in New York for the first time since June, with Qatar mediating. Talks were overall reported as positive, but it feels like we've seen this movie before, so the market is slow to show any signs of exuberance. 

This coming week, we get another deluge of economic data. PCE, ISM and jobs data all fall in the same week, PCE on Wednesday, and the usual cadence of jobs data prints. The market's consensus is for unemployment to remain at 4.1% and 90,000 jobs added. Though will also be watching to see if last month's surprise print of 162,000 jobs gets revised. That's it for this week. Let us know if we can help.