〔Day Digest〕Fed Resumes Hikes After Three-Year Pause; 30Y at 5.488% (2004 High), 10Y Near 5.21% as Nasdaq Still Prints +2% on the Week - Duration Repricing vs. AI-Led Equity Split

0. Weekly Arc

The Fed resumed hiking after a three-year pause ^[1][2], and the long end pushed to multi-year highs — 30Y at 5.488% (2004 peak), 10Y at 5.163-5.21% (2007 peak), 20Y near 5.55% ^[3][4]. Yet equities diverged: S&P 500 +1.2% on the week, Nasdaq +2%, with Microsoft and AI names leading the Friday rebound ^[4]. The mechanism: duration is being repriced on inflation/term-premium fears, while equity flows remain anchored to the AI capex thesis.

1. Policy Narrative

• **[NEW] Fed action:** raised rates for the first time in three years ^[1][2].
• **[NEW] CME FedWatch:** October hike probability priced at ~60%+ early in the week, ~64% by Friday's close ^[5][4].
• **[ESCALATED] Hammack (Fed):** worried inflation expectations could deteriorate ^[6].
• **[NEW] Drivers cited for the long-end move:** Fed Governor Michael Barr's remarks, the Iran conflict pushing energy prices higher, and a hot PMI print ^[4].
• **[ONGOING] Philadelphia Fed opening remarks ^[7]; upcoming US jobs and inflation data set the policy path ^[8].

2. Long-End Repricing

• **[ESCALATED] 30Y at 5.488%, the highest since 2004; 10Y at 5.163-5.21%, a 2007 peak; 20Y near 5.55%; 10Y TIPS real yield approaching 2.8% ^[3][4].**
• **[NEW] Bank of America** warns that the combination of rising yields and a financial-sector selloff raises the risk of a panic episode; it urges investors to watch both the bond market and financial stocks ^[5].
• **[NEW] Invesco's Paul Jackson:** the 10Y 12-month moving-average threshold sits at 4.72% — current ~4.34% — and he has begun rotating from equities into Treasuries ^[5]. BlueBay Asset Management's Mike Bell adds that the 5% level is a psychological marker, not a hard cap ^[5].

3. Equity Divergence

• **[NEW] Friday close:** Dow +478.64 (+0.93%) to 51,828.62; Nasdaq +0.50% to 27,068.72; S&P 500 +0.51% to 7,743.41 ^[4].
• **[NEW] Weekly:** Dow +0.3%, Nasdaq +2%, S&P 500 +1.2% ^[4].
• **[NEW] Cross-market tech (Sept 1 to Sept 24-25):** Nasdaq +~3.2%, STAR 50 -~1.6%, Hang Seng Tech -~5.2%, Taiwan +~2.3%, Nikkei +~0.4%, KOSPI +~3.6% — different answers to the same yield move ^[3].
• **[NEW] Microsoft led the AI rebound; gold and silver stabilized, oil fell 2%+ on Iran/Hormuz reopening hopes ^[4].

4. Macro Backdrop

• **[NEW] US core capital goods orders** rose more than expected in August, with July revised sharply higher, pointing to robust business equipment spending tied to AI infrastructure ^[9].
• **[NEW] Nomura preview:** expects September nonfarm payrolls and the unemployment rate to edge lower, freeing the Fed to focus more on inflation ^[10].
• **[NEW] US economic database** describes US recession risk as "extremely low" ^[11].
• **[NEW] Fed rate hike impact on women-owned businesses' credit gap flagged ^[12].

5. What Decides Next

• The September nonfarm-payrolls and subsequent inflation prints are the falsifiable test for both the duration selloff and the equity divergence ^[8][10].
• Bank of America's panic-scenario triggers (yields and financials breaking together) would mark the regime shift; absent that, the AI capex story keeps absorbing the long-end repricing ^[5][9].
• Source quality: the recession-risk and Nomura items are single-source bulletins/previews ^[10][11]; the cross-market tech tally spans uneven cut-off dates and should be read as a directional split, not a tight like-for-like ^[3]. The Phoenix Fed remarks carry no transcript content in the packet ^[7].