U.S. stocks opened higher and fluctuated, the Japanese yen rebounded more than 1% intraday, 10-year U.S. Treasury yields broke above 5.22% again, and U.S. crude oil once fell nearly 3%.

On Friday, September 25, the three major U.S. stock indices opened higher together, with the S&P and Nasdaq briefly turning negative in early trading. In the currency markets, the yen surged as much as 1.2% at one point, making it the strongest performer among G10 currencies, with investors focusing on consecutive signals from Japanese and U.S. officials that the "weak yen is a problem."

The volatility in U.S. stocks during early trading was clearly influenced by U.S. economic data. After the release of the final reading of the University of Michigan Consumer Sentiment Index for September, the S&P 500 and Nasdaq both turned lower from gains, and the Dow also erased most of its advance; shortly after, all three major indices regained their upward momentum, with the Dow on track to end a three-day losing streak.

Data showed that the final consumer sentiment index for September fell to 48.1, a four-month low. One-year inflation expectations rose to 4.6% from 4.0% in August, while 5- to 10-year inflation expectations increased to 3.4%, the highest since May of this year. According to commentary, declining consumer confidence and deepened concerns about prices and economic outlook dampened the early stock market rally, which had been fueled by falling oil prices and U.S. bond yields.

In the bond market, medium- and long-term U.S. Treasury yields continued to hit multi-year highs. The yield on the 10-year Treasury rose above 5.22% intraday on Friday, refreshing at least a 16-year high for the third consecutive session; the 30-year yield climbed above 5.55% for the second straight day, hitting the highest since 2004.

However, cautious optimism about diplomatic efforts between the U.S. and Iran temporarily outweighed concerns over supply disruptions in the Middle East. International crude oil futures, which had rallied for two days, retreated and eased some selling pressure in the bond market. According to Xinhua News Agency, Iranian Foreign Minister Araghchi said during the UN General Assembly on Thursday, September 24, that Iran had submitted a new negotiation draft to the U.S., which would "reopen" the Strait of Hormuz and resume talks. Reports cited Araghchi as saying that if the U.S. meets conditions, the Strait could be reopened within seven days.

U.S. Stocks: The Three Major Indices Open Higher Amid Volatility, Meta Falls Over 3% Intraday

At Friday’s open, all three major U.S. stock indices climbed. The Dow maintained its gains, while the S&P 500 and Nasdaq briefly turned slightly negative in early trading before rebounding.

According to Bloomberg, as of 10:38 a.m. ET, the S&P 500 and Nasdaq 100 were roughly unchanged, after both indices had earlier climbed as much as 0.4% and 0.6%, respectively. This trend closely tracked the timing of the University of Michigan data release: following the report, worries over inflation and the economic outlook intensified, shrinking early gains and sending the S&P and Nasdaq briefly into the red, while the Dow gave back most of its rise.

The weakness in the data is especially noteworthy. The final September University of Michigan Consumer Sentiment Index dropped to 48.1, further declining from August and hitting a 4-month low. At the same time, the one-year inflation expectation moved up from 4% to 4.6%, and the 5- to 10-year outlook rose to 3.4%, a high since May.

This means the market faces a relatively tricky combination: consumer confidence in the economic outlook is waning while inflation expectations are heating up again. This could imply heightened worries about economic growth while also potentially limiting the Fed’s room to ease policy further.

However, as Treasury yields paused their rise and oil prices retreated from highs, U.S. stocks regained some support. Should the current trend hold until Friday’s close, the S&P 500 and Dow could post their first daily advances in four sessions, with the Nasdaq set for a second consecutive gain.

For the week, as of Thursday's close, the S&P 500 was up about 0.7%, the Nasdaq up around 1.6%, and the Dow down roughly 0.6%. If Friday’s gains hold, the S&P 500 could break a two-week losing streak; the Nasdaq may rise for a second week, but the Dow might still fall for a fourth consecutive week.

Among individual stocks, Meta Platforms (META) drew market attention on Friday. Meta had climbed 4.5% on Thursday, marking a two-day rally to its highest level since September 2025, but after a higher open on Friday, it quickly reversed and was down more than 3% intraday. Despite this pullback, Meta's stock has gained over 30% in the past month.

Meta’s recent surge has been driven by the launch of its next-generation AI glasses, VR headsets, and hardware devices supporting its AI assistant Muse. Friday's pullback came against a backdrop of market pressure after the consumer confidence data.

U.S. Treasuries: 10-Year Yield Rises Above 5.22% Again, Hits New High For Third Straight Day Since 2007

The U.S. Treasury market remained the focal point for global asset volatility this week.

After breaking above 5.22% on Thursday, the benchmark 10-year Treasury yield rose above 5.22% again on Friday, hitting at least a 16-year high for the third consecutive session.

The 30-year Treasury yield saw even more dramatic moves, climbing above 5.55% intraday for the second day in a row, reaching new highs since 2004.

In early Friday trading, Treasury yields briefly dipped as oil prices fell, but quickly rebounded after the Michigan data release. Consumer one-year inflation expectations rising to 4.6% further reinforced market concerns around inflationary pressures.

The Wall Street Journal noted the 10-year Treasury yield rose about 16 basis points this week, 40 basis points this month, and is up about a percentage point so far this year. The rapid rise in long-term yields means the market is demanding higher term premiums, which continues to raise the valuation barrier for equities and other risk assets.

This is a key recent shift for global markets: while U.S. stocks remain supported by the AI investment boom, 5%+ long-term Treasury yields have become an important headwind for equity valuations.

Meanwhile, the market is still repricing expectations for future Fed policy. Recently, surging oil prices have fanned inflation worries, and with consumer inflation expectations climbing, odds of a Fed rate hike in October have increased significantly. New York Fed President John Williams said Friday that if supply shocks affect prices, the Fed cannot simply ignore them.

Yen/USD Up 1.2% Intraday As U.S. and Japanese Officials Both Signal "Weak Yen Is A Problem"

The biggest event in the FX market on Friday was the yen.

The yen rose as much as 1.2% against the U.S. dollar intraday to ¥156.98, its biggest one-day gain in nearly three weeks, and the top performer among G10 currencies.

The direct catalyst for the yen’s sudden strength was rare, coordinated signals from both Japanese and U.S. officials.

Bloomberg reported that Japanese Prime Minister Sanae Takaichi this week told U.S. President Trump that the undervalued yen is a "problem." Japanese Finance Minister Katayama Satsuki said Friday that Trump had expressed concern about yen weakness during their meeting. That day, Katayama also held online talks with U.S. Treasury Secretary Bessent, during which both sides again discussed yen depreciation.

These statements came as USDJPY had been approaching 159, quickly drawing market attention to the risk of further FX intervention by Japanese authorities.

“Intervention risk should cap further yen weakness,” OCBC strategist Moh Siong Sim told Bloomberg, adding that Trump’s concern over the yen’s decline could signal deepening coordination between the U.S. and Japan in supporting the currency.

Therefore, Friday's appreciation of the yen was not just the result of changing interest rate expectations in Japan, but more importantly, the market began to reprice the U.S. and Japan’s policy tolerance for excessive yen weakness.

Diplomatic Solution Hopes Between U.S. and Iran Rise, Crude Oil Ends Two-Day Rally

International crude oil futures fell across the board on Friday as expectations for a diplomatic resolution between the U.S. and Iran increased, pressuring oil prices that previously surged on Middle East supply risks.

As European stocks hit new intraday lows, WTI crude oil briefly fell to $92.04 per barrel, down over 2.7% on the day. Brent crude fell to $104.34, down more than 2.1%. By contrast, both benchmarks had jumped about 2.7% and 3.4% on Thursday, marking significant one-day rallies recently.

An important catalyst for Friday’s oil price decline was the rising expectation of a diplomatic resolution between the U.S. and Iran.

According to Xinhua News Agency, Iranian Foreign Minister Araghchi told reporters on Thursday, September 24, during the UN General Assembly’s general debate, that Iran had submitted a new negotiation draft to the U.S., would “reopen” the Strait of Hormuz, and resume negotiations.

Xinhua, citing Reuters on Thursday, reported that U.S. and Iranian negotiators were discussing a phased agreement in New York that would include Iran "reopening" the Strait of Hormuz in exchange for relief from U.S. economic sanctions. Araghchi refused to disclose the specifics of the draft, but said the terms were based on the memorandum of understanding reached by both sides in June.

According to reports, Araghchi said Thursday that Iran, via intermediaries, had proposed to the U.S. a plan to reopen the Strait of Hormuz within seven days if specific conditions are met, with related negotiations to resume as well. Iranian President Pezeshkian also said Thursday that whether the war ends depends on the U.S., and that both sides are currently maintaining communication through intermediaries.

This means the market is beginning to reprice the possibility of reduced Middle East supply risks. The Strait of Hormuz is a key global energy corridor; if shipping resumes, the risk premium in oil prices due to current supply disruption may unwind.

However, the drop in oil prices is also limited by ongoing geopolitical uncertainties. The market continues to weigh cautious hopes for a diplomatic breakthrough against further escalation risks. Reuters noted that Houthi attacks on Saudi Arabia could still disrupt supply from the major oil producer, so oil has not fully priced out supply risks yet.

Therefore, Friday’s oil decline mainly reflected profit-taking on the risk premium due to diplomatic solution hopes, not confirmed relief from Middle East supply risk. After the recent rapid rally in oil prices, investors are highly sensitive to any signals about a possible reopening of the Strait of Hormuz. But as long as regional military conflicts persist, oil will find it hard to fully erase geopolitical risk premia.

For the week, oil prices saw wild swings. WTI jumped 2.7% on Thursday after several consecutive daily declines. Brent surged 3.4% Thursday. Both benchmarks fell back on Friday, showing that diplomatic optimism temporarily outweighed supply disruption concerns that had driven previous oil gains.

Gold: High Interest Rates and Strong Dollar Continue to Pressure Prices

Gold remained under pressure on Friday from a combination of high interest rates and a strong dollar.

With the 10-year U.S. Treasury yield holding around 5.2%, the opportunity cost of holding non-yielding gold continues to rise. At the same time, the stronger dollar makes dollar-priced gold more expensive for overseas investors.

As a result, this week’s gold market has seen a tug-of-war between demand for geopolitical safe haven and the negative pressure from high rates. Despite continuing uncertainties in the Middle East, rising Treasury yields have become the dominant force weighing on gold prices.

Weekly Markets: AI Props Up U.S. Stocks, "5% Treasuries + High Oil" Dominate Pricing Again

Looking back at this week, the main narrative in global markets has remained the tug-of-war between the AI boom and macro rate pressures.

On Wall Street, AI-related stocks continued to provide support, with the S&P 500 and Nasdaq both on track for weekly gains as of Thursday. At the same time, however, U.S. yields surged and the dollar strengthened, showing lingering concerns about inflation and rates.

Bonds clearly lagged equities this week. The 10-year Treasury yield hit fresh 19-year highs for a third straight day, the 30-year reached its highest since 2004, and rising long-term yields became a key backdrop for global asset volatility.

In the FX market, the dollar remained strong overall, but the yen's sudden surge on Friday added a new policy variable. Oil whipsawed around Middle East supply risks and reopening expectations for the Strait of Hormuz, while gold was suppressed by the high interest rate environment.

So by midday Friday, the markets presented a rather representative combination: AI continues to prop up U.S. stocks, but 5%+ long-term Treasuries, high oil prices, and renewed inflation expectations are steadily raising the hurdle for risk assets to climb further. At the same time, coordinated worries from U.S. and Japanese officials about yen weakness made the Japanese yen one of the most closely watched currencies as the week ended.