The strong September payroll report set a solid foundation for October’s economic data, raising questions about how much the Federal Reserve might adjust policy. Earlier this month, bond yields held steady with a light economic calendar, highlighted by September’s Retail Sales report, which showed strong consumer spending.

However, bond yields have surged over the past month. The 10-year Treasury climbed by 50 basis points in part due to signs of economic resilience and speculation of a potential Republican sweep in the upcoming election. Mortgage spreads have also widened to six-month highs relative to Treasuries, signaling investors are remaining cautious as the election nears.

This week, markets have shown some stability, suggesting that investors may be comfortable with current levels while awaiting clearer direction in the coming weeks.