It was notable that the long-end of the US Treasury curve saw no relief Tuesday from an underwhelming read on ISM manufacturing and a generally cautious first-of-the-month trade in risk assets.

Although there were no real “surprises,” per se, in the ISM readout, another lackluster read on the survey’s employment gauge validated investor trepidation on the outlook for the US labor market (even as a meaningful uptick in new orders offered a silver lining) and the risk-off tone evident in equities felt particularly inauspicious considering the looming seasonal.

Of course, weakness in stocks could be a function of front-running. Everyone knows we’re staring down a challenging several weeks for the S&P, so why not get ahead of it? Why not sell now?

There’s the chart again. “September is historically the weakest month for equities, with volatility rising and retail participation fading,” Citadel’s Scott Rubner said. “With systematic strategies already near max allocation and corporate demand set to slow, risk/reward skews to the downside, making hedges attractive,” he added.

As for bonds, and specifically the US long-end, it’s important to note there’s some seasonal drag in play there too. The post-Labor Day corporate supply slate tends to be heavy, and that overhang can bias Treasury yields higher.

But it’s not just that. A new 27-year high for 30-year gilt yields underscored the persistence of fiscal profligacy concerns across the global DM long-end. In the US, such worries are exacerbated by the Trump administration’s efforts to commandeer monetary policy.

30-year yields in the US were back flirting with a five-handle on Tuesday, and as discussed in the latest Weekly, the long bond’s diverged entirely from the market-implied neutral rate.

The figure above, which BMO’s rates team highlighted late last week, is pretty poignant.

“The weakness in the long-end of the curve is difficult to fade given the sticky aspects of the inflation complex and the ongoing uncertainty regarding the ultimate impact of the new tariff schedule,” BMO’s Ian Lyngen said Tuesday, adding that “the tone of global fixed income is once again being influenced by higher UK borrowing costs on renewed budgetary concerns, a well-traveled narrative to be sure [but] one that nonetheless continues to cheapen duration and leave investors increasingly more comfortable with shorter maturities.”

I should mention (again) the appeals court ruling against Donald Trump’s tariffs, which at least raises the specter that some of the import duties collected so far will need to be refunded. I think that’s far-fetched — the Supreme Court’s very likely to rule in Trump’s favor and he said Tuesday he’ll seek an expedited decision from the Justices — but the prospect of lost revenue was topical all the same. “If this ruling is upheld, refunds of existing tariffs are on the table,” a Raymond James analyst mused. “[That] could cause a surge in Treasury issuance and yields.”

I received a somewhat acerbic mail over the weekend from a reader scoffing at the notion that a loss of Fed independence in 2026 is a real concern. I can assure you it is. A real concern, I mean. How big of a concern (i.e., how worried we should actually be that a Trump-friendly 4-3 Board majority will refuse to approve regional Fed presidents seen as insufficiently dovish) I can’t say. But various versions of the second chart shown above are making the proverbial rounds, and that speaks volumes.

“Any erosion of Fed independence will have untold implications for the US and global economies and this is starting to play out in market pricing,” Citadel’s Nohshad Shah said, noting that 1y1y USD forward swaps reflect a return to neutral, while 10y10y forwards, at ~4.70%, are the highest in more than 10 years.

“This likely reflects a level of concern from bond markets around deficits, inflation and risk premium for Fed independence,” Shah went on, referring to the discrepancy, which looks quite a bit like the divergence illustrated above. “All told, the risks of damaging Fed independence are akin to damaging Brand USA and the medium-term implications are likely to be wide-ranging and uncertain.”