Stocks finished the day lower, with the S&P 500 dropping about 50 basis points. Most of the session was driven by volatility selling, with the index falling around 60 to 70 basis points at the open and the VIX spiking to about 18. From there, the VIX moved steadily lower throughout the day, eventually settling in the 16 to 17 range. Once that early volatility spike was fully reset, the equity market essentially stalled and ultimately traded lower into the close, giving back most of the gains seen earlier off the opening low.

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Of course, today was a Treasury settlement day, with about $84 billion settling, which led to significantly tighter overnight financing conditions, with the DTCC-averaged overnight repo rate averaging 4.14%. This likely means we’ll see SOFR move even higher tomorrow, from the 4.12% published this morning for Friday’s trade date.

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Not only did SOFR rise on Friday, but the TGA also increased from $899.7 billion on the 26th to $956 billion as of the 28th. When we think about what that implies, it suggests reserve balances have likely fallen as well, and it’s quite possible they’ve dropped back into the low $2.8 trillion range, given the amount of issuance and the volume of settlements over the past couple of trading sessions.

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The 30-year Treasury rate also rose nearly 8 basis points on the day to 4.75%, and it has formed what appears to be an inverse head-and-shoulders pattern over the past couple of trading sessions. On top of that, it seems to have broken out of a falling wedge pattern, with the RSI turning decisively higher and breaking its downtrend—suggesting momentum has shifted more bullish for rates. If this pattern completes, the 30-year rate could climb back toward 5%, retracing the decline that began on September 3rd.

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Meanwhile, the Japanese 5-year rate rose 5 basis points overnight to 1.37%, and it now appears to be in a position to move even higher—potentially toward 1.55%, which is the next major technical resistance level on the weekly chart, dating back to June 2008.

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Finally, BTIC S&P 500 total-return adjusted interest rate futures for the effective funds rate fell again on the day, dropping to 75 basis points for the December 2026 contracts. Most equity financing rate contracts were lower today. This is likely a reflection of the tighter liquidity conditions we’ve been seeing in the overnight funding market and may also indicate that equity repo financing is beginning to weaken.

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