Credit & Fed Desk: October 12, 2026
Good morning. It's Monday, October 12th, and you are listening to the Credit and Fed Desk.
It's a holiday Monday. The bond market is closed for Columbus Day, so the scoreboard is frozen at Friday. The ten-year Treasury yield finished the week at 5.24 percent. That's down 4 basis points on the week, after Monday's close of 5.31 percent, the high of the week. A calm-looking number.
The quieter number sits underneath it. The ten-year real yield, the inflation-protected one, closed Friday at 2.91 percent. Since September 9th, using Treasury's own data, the real yield is up 45 basis points, while the regular ten-year is up 41. Translation: the climb to these highs was not an inflation scare. Investors are demanding more actual return.
Then on Sunday, Cleveland Fed President Beth Hammack, by way of Nick Timiraos at the Wall Street Journal: higher yields are "absolutely not" a substitute for Fed hikes. Markets put the odds of an October hike at roughly one in five. Wednesday's inflation report decides whether that moves.
Show notes
- Fed: Hammack on a Cleveland factory floor, 'smaller, more frequent' hikes, and yields 'absolutely not' a substitute; October odds about one in five ahead of Wednesday's CPI; the Cook 'process.'
- Treasuries: the ten-year ends the week at 5.24% while the real yield climbs 45 bp since Sept 9 to 2.91%; CBO's 6.2% deficit and Authers on taxes.
- Credit: CCC at 12.52%, the widest in at least three years, while investment grade sits at 82; Oaktree's 'New Terms' and private-credit software marks.
- AI capital: OpenAI seeks $30 billion ahead of a possible 2027 IPO, Firmus's flop, Anthropic's investor day, and a bridge into Tuesday's bank earnings.
- Arthur Hayes (labeled, speculative) on France and printing; France's budget debate and oil; the scoreboard and calendar.