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The September scaries return: Bonds crack the whip, stocks feel the sting

Bonds drive the story

The market didn’t need a calendar reminder—September announced itself with the usual malice. Stocks sagged, bonds buckled, and traders felt that familiar chill that creeps in when summer’s easy drift gives way to autumn’s turbulence. The “September Scaries” are no superstition: history has trained us well that this is the cruellest month for equities, and it wasted no time reminding us.

The real whip hand belongs to Treasuries. The U.S. 30-year yield is now pressing against the 5% line, a level that matters not only because it feels like a psychological cliff but because it reshuffles the curve and with it every valuation model sitting on Wall Street terminals. When the long end lurches higher, it isn’t just a yield curve—it’s a wrecking ball. Tech, with its stretched multiples, takes the first blows. Nvidia slid again, marking its longest losing streak since March, while Apple and Amazon gave up ground as well. Nearly 400 S&P stocks closed lower, proof that it wasn’t just a tech wobble but a broad-based stumble.

Behind those yield moves sits the bond market’s gnawing worry: the U.S. fiscal position. The appeals court’s ruling that Trump’s tariffs were largely illegal suddenly makes “refund risk” real. Billions collected might need to be handed back, just as the Treasury is already shovelling record issuance into a market that has grown wary. Bond desks don’t need to squint to see the pressure building.

Layered on top is pure calendar gravity. September’s track record is infamous, with average S&P losses north of 2% across the last decade and closer to 4% in the past five years. Even in years where summer strength delivered fresh highs—this one gave us twenty new peaks before Labor Day—the market has had a habit of surrendering some of those gains once the school bell rings. Call it muscle memory: portfolio managers know it, algos are coded to it, and systematic selling tends to pile in at the worst possible moments.

That showed up today with CTAs sitting in the 100th percentile of positioning—ripe for unwind. Nasdaq broke below its 50-day moving average for the first time since April, and the VIX ticked toward 19, signaling nerves are starting to spread. The vol complex itself hints at more pain, with VVIX leading the move, a telltale sign that demand for options insurance is heating up ahead of Friday’s jobs print.

The data wasn’t dire, but it wasn’t soothing either. ISM manufacturing scraped in at 48.7, a hair better than July but still in contraction. Tariffs were mentioned more often in the survey, showing just how embedded the trade noise has become in corporate planning. Construction spending disappointed, but not enough to derail economists from nudging up GDP trackers. It all felt like background static against the real driver—rates and tariffs.

Meanwhile, the dollar caught a bid, a classic safe-haven tell when both stocks and bonds wobble. That made gold’s breakout all the more striking. Bullion surged past $3,500 for the first time ever, a milestone that reads less like a safe-haven move and more like a full-blown vote of no confidence in fiscal stewardship. Bitcoin too has been whipping around, though in relative terms it’s slipping versus gold—a reversal of last year’s “digital hedge” narrative.

For now, Friday’s jobs report looms as the next data point capable of changing the narrative. But make no mistake, the tone of the month has been set. Wall Street has walked into September weighed down by heavy debt issuance, fiscal doubt, tariff drama, and the grinding fact of seasonality. The 30-year near 5% isn’t a passing headline; it’s the market reminding us that money has a cost again.

The September Scaries are back, and once again the bond market is playing villain, equity traders the victims, and gold the only asset enjoying the panic.

Author

Stephen Innes

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

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