The most important number in Thursday’s data was not the headline. The ISM manufacturing prices index jumped to 77.9 for September, from 71.1 in August and well above the 72.0 forecast. A reading that high means a large majority of purchasing managers paid more for inputs than a month earlier, and it lands awkwardly for a Fed already fighting sticky inflation.

The 10-year Treasury yield reacted first. It climbed to about 5.33% during the session, the highest since 2002, as traders priced a firmer path for rates. Equities opened soft for the same reason: higher discount rates compress the present value of future earnings, and long-duration technology shares are the most exposed.

Then the move reversed. The 10-year closed at 5.24%, down five basis points from Wednesday’s 5.29%, and stocks recovered with it. The S&P 500 rose 0.20% to 7,666, the Nasdaq Composite edged up 0.04% to 26,871 and the Dow added 0.04% to 50,927. Oil added to the volatility, with WTI crude up $2.45 to $92.87 a barrel on Middle East supply worries, which keeps energy costs in the inflation conversation.

The rest of the ISM report was more balanced. The headline PMI slipped to 54.5 from 54.6, a little under the 55.0 forecast, but it still marks a ninth straight month above 50. New orders improved to 55.3 from 53.7 and employment rose to 52.7 from 51.2, so demand is not the problem. Production eased to 56.7 from 58.3 and inventories fell to 48.6. Respondents blamed tariffs, steel availability and Iran-related disruption for the cost pressure. Because these indexes measure breadth, a prices reading near 78 says input inflation is widespread, not that costs rose by any specific percentage.

The S&P Global manufacturing PMI told a similar story with a different twist. The final September reading came in at 55.9, below the 57.0 flash estimate and the 57.0 forecast, but up from 53.9 in August and the strongest since May 2022. Measured against the August final, the sector accelerated. Measured against the flash, it was a downward revision.

Weekly jobless claims offered the calmest signal. Initial claims for the week ended September 26 came in at 197,000, below the 199,000 forecast and a touch under the prior week’s revised 198,000. A labour market this tight supports consumer spending but leaves little room for the Fed to look past hot price data.

Taken together, the session showed a manufacturing sector with firm demand and rising costs, and a bond market that tested its recent highs before stepping back.

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