ASX 200 Live Today - Tuesday, 6th October

Welcome to our live ASX coverage for Tuesday, October 6. Expect a high volume of posts pre-market and more periodic updates throughout the day. We'll be wrapping the blog up around 2:00 pm AEST. Let us know how we can make it even better.

Long-dated Treasury yields hit highest since 2002

[8:42 am] US 10- and 30-year yields hit fresh 24-year highs as a hot services inflation gauge kept Fed hike bets alive.

• The 10-year yield hit 5.35% intraday, its highest since April 2002, before settling at 5.31%

• The 30-year yield touched 5.70%, the highest since May 2002, before easing to 5.66%

• ISM services prices paid jumped to 74.0 from 72.6, the highest since July 2022, while the headline PMI slipped to 54.9 vs 55.2 ests

• Markets are pricing a 20-25% chance of an October Fed hike, with a December hike almost fully priced (88% per CME FedWatch)

• This week's auctions of 10- and 30-year debt will test demand for duration, starting with a US$58bn 3-year sale on Tuesday (US time)

Stifel lifts S&P 500 target to 7,900

[8:40 am] Stifel raised its year-end S&P 500 target, betting AI investment and resilient government spending will keep earnings growing despite higher-for-longer rates.

• Year-end target raised to 7,900 from 7,800, implying 1.9% upside from current levels

• Stifel said "tech capex and operating leverage still power S&P 500 margin expansion"

• Strong economic activity is keeping rates higher for longer, with sticky inflation driving markets and bonds offering less protection

• The forecast sits below many brokers, which expect the S&P 500 to finish 2026 at or above 8,000

BofA says 'easy money' from AI capex trade is over

[8:40 am] Bank of America strategists say the long AI capex, short consumer trade is now crowded and it's time to selectively pivot.

• Savita Subramanian said "alpha from buying AI capex beneficiaries and selling white-collar consumption themes may be harder fought"

• Positioning in AI disruptees (IT services, consumer finance, software) is near record lows, while industrials vs discretionary sits near record highs

• Fund managers are most overweight electronic equipment, instruments and components

• Subramanian said it is "dangerous to underestimate the appetite of US consumers" and capex strength may be largely priced in

• Consumer staples are up 4.6% over 12 months vs a 3.3% fall in discretionary, with Lululemon and Nike both down about 50%

Source: Bloomberg

JPMorgan tips US high-grade credit to beat Treasuries

[8:39 am] JPMorgan expects US investment-grade bonds to outperform Treasuries in the fourth quarter as supply slows and corporate earnings hold up.

• JPMorgan expects JULI index spreads to tighten to 85bps from 96bps on Friday

• Remaining 2026 issuance of about US$305bn would make Q4 the slowest quarter, with a further US$50bn of hyperscaler supply a "drop in the bucket"

• Catalysts include more subdued rate volatility and stronger domestic and foreign demand as yields settle

• Strategists said "US HG is the best house on a bad block", as growth-driven yields favour corporate credit over MBS and munis

Source: Bloomberg

Good morning!

[8:28 am] ASX 200 futures are up 27 pts (+0.31%). Here's what happened overnight:

• Megacap tech carried Wall Street to a Nasdaq record, even as bond yields kept climbing

  • SpaceX (+7.6%), Tesla (+2.2%), Nvidia (+2.1%), Broadcom (+2.0%)

  • S&P 500 (+0.66%), Nasdaq (+1.05%), Dow (+0.18%), Russell 2000 (+0.50%)

• The global bond selloff deepened, with long-dated Treasury yields at 24-year highs and French debt fears pushing the euro to a 17-month low

• Iran escalation remains a key risk, as Trump linked a UK air base threat to Tehran and Aramco warned oil stockpiles could take two years to rebuild