The Five-Year Auction Cleared Above 5% for the First Time Since 2006 and the Seven-Year for the First Time Since Its 2009 Revival, Sysco Paid Up to 6.60% for $10.75 Billion of Notes, and Utilities, REITs and Banks Have Lagged the S&P 500 Since the Hike

by Tomas Ferreira · October 2, 2026

Markets Reporter, US Market Current

The cost of money to the U.S. government moved up a full step in the two weeks after the Federal Open Market Committee raised the federal funds target range to 3.75%–4.00% on Sept. 16, and the evidence sits in Treasury's own auction records. The $70 billion five-year note sold on Sept. 23 stopped at a high yield of 5.033%, the $44 billion seven-year on Sept. 24 at 5.085%, and the $69 billion two-year on Sept. 22 at 4.787%, according to results published by TreasuryDirect. The same three maturities had been sold a month earlier at 4.393%, 4.512% and 4.204% respectively, so the September auctions cleared 64, 57 and 58 basis points higher on our arithmetic. TreasuryDirect's auction records show no five-year note auction stopping at or above 5% since June 2006, and no seven-year since that maturity was reintroduced in 2009.

The 10-year yield, as recorded in Yahoo Finance's historical rows for the ^TNX index, closed at 5.006% on Sept. 16, the day of the hike, drifted to 4.968% on Sept. 22, then jumped to 5.114% on Sept. 23 and rose in every remaining session through quarter-end, closing Sept. 30 at 5.293%. The Oct. 1 row shows an intraday high of 5.342% and a close of 5.237%. The Associated Press described the same path in its Oct. 1 market report: the yield moved "toward 5.34 per cent and its highest level since 2002" before it "relented later in the day and pulled back to 5.23 per cent from 5.29 per cent late Wednesday."

The Sept. 23 break was the pivotal session. CNN's John Towfighi reported that day that the 10-year "surged 15 basis points to 5.11%, a fresh high for this year and the highest level since 2007," and that "the five-year Treasury yield rose above 5% for the first time since 2007 after a regularly scheduled auction Wednesday." The report tied the move to S&P Global's flash PMI showing September business activity accelerating at the fastest rate since July 2021 with energy-driven input costs, to Brent crude settling at $103.08, and to CME FedWatch odds of an October hike rising to 66% from 55%.

The long end moved further. The 30-year yield (^TYX) closed Sept. 16 at 5.349% and Sept. 30 at 5.638%, and on Oct. 1 printed an intraday high of 5.691% before closing at 5.603%. The five-year (^FVX) went from 4.859% on hike day to 5.089% at quarter-end and back to 5.005% on Oct. 1. The 13-week bill rate (^IRX) ended the span almost where it began, 3.970% on Sept. 16 and 3.982% on Oct. 1, after reaching 4.070% on Sept. 25: the repricing has been concentrated beyond the front end.

The FOMC's own statement was brief. The committee voted 12–0 to raise the target range "by 1/4 percentage point to 3-3/4 to 4 percent, in support of the Federal Reserve's dual mandate." It described economic activity as "expanding at a solid pace," said "productivity growth is strong, and capital investment is robust," and closed with three sentences on prices: "Inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal. The Committee will deliver price stability." The statement contains no forward guidance on the size or timing of further moves.

Auction demand did not collapse at the higher yields, but it did not surge either. Bid-to-cover ratios were 2.63 for the two-year, 2.21 for the five-year and 2.42 for the seven-year, against 2.60, 2.37 and 2.50 at the August sales, per TreasuryDirect. On the seven-year, indirect bidders took $24.87 billion of the $44 billion offered, direct bidders $13.16 billion and primary dealers $5.45 billion; on the five-year, dealers were left with $10.99 billion of $70 billion. All three notes settled on Sept. 30, the last day of the quarter.

For equity investors, the more direct transmission is through corporate borrowing costs, and three bond deals filed with the SEC in the period show what the new curve costs. On Sept. 22, Sysco Corp. and Sysco Holdings priced $10.75 billion of senior notes in seven tranches to help fund the cash portion of their acquisition of Jetro Restaurant Depot, according to the prospectus supplement, with coupons stepping from 5.450% on $1.75 billion due 2029 through 5.950% on $2.0 billion due 2036 to 6.600% on $750 million due 2066. Net proceeds were estimated at approximately $10.64 billion.

The same day, Dick's Sporting Goods priced $400 million of 6.200% senior notes due 2036 and $600 million of 6.900% notes due 2056, with net proceeds of about $988 million for general corporate purposes that "may include" debt repayment, share repurchases and acquisitions, per its Sept. 22 prospectus supplement. On Sept. 28, Kroger sold $650 million of 5.800% notes due 2032 and $850 million of 6.200% notes due 2036, raising about $1.49 billion "to refinance debt that matures in October 2026 and for general corporate purposes." Across the three issuers, $13.25 billion of bonds carried coupons from 5.45% to 6.90%, and two different companies paid exactly 6.200% for ten-year money six days apart.

For context, the 10-year's historical rows show its first close above 5% in records going back to the start of 2025 came on Sept. 16, the day of the hike. What changed in the fortnight since is that the belly of the curve joined the long end above 5%, raising the discount rate applied to medium-dated cash flows and, as the week's deals show, the coupon on five- to ten-year corporate paper.

Rate-sensitive sector funds have lagged since the hike. Using Select Sector SPDR and iShares closing prices from Yahoo Finance historical rows, the Utilities Select Sector SPDR (XLU) closed Sept. 16 at $41.32 and Oct. 1 at $39.68; the Real Estate Select Sector SPDR (XLRE) went from $42.81 to $40.68; the Financial Select Sector SPDR (XLF) from $55.93 to $53.46; and the SPDR S&P Regional Banking ETF (KRE) from $72.74 to $69.95. Over the same eleven sessions the S&P 500 rose from 7,551.81 to 7,666.45. On our arithmetic, that is a decline of about 4.0% for utilities, 5.0% for real estate, 4.4% for financials and 3.8% for regional banks against a 1.5% gain for the index.

Homebuilders complicate the simple story. The iShares U.S. Home Construction ETF (ITB) closed at $88.12 on Sept. 16 and $87.37 on Oct. 1, down less than 1% on our arithmetic, and the SPDR S&P Homebuilders ETF (XHB) was essentially unchanged at $96.78 versus $96.80. Both printed sharp intraday lows on Oct. 1 ($84.81 and $94.08 respectively, per the historical rows) when the 10-year was at its high, and recovered into the close as yields fell back.

Thursday's intraday reversal, from a 5.342% high to a 5.237% close, is the pattern to watch. The S&P 500 finished up 14.91 points at 7,666.45, per AP, which said Nvidia "was the single strongest force lifting the S&P 500" and that the yield's retreat "helped stocks on Wall Street recover their losses and turn higher."

The next tests are already scheduled. TreasuryDirect's announcement calendar shows a $58 billion three-year note auction on Oct. 6, a $39 billion reopening of the 10-year on Oct. 7 and a $22 billion reopening of the 30-year on Oct. 8. The last nominal 10-year reopening, on Sept. 9, cleared at 4.834% and the last 30-year reopening, on Sept. 10, at 5.308%, both before the hike and before the Sept. 23 break. The September employment report, scheduled for Friday morning, and whatever the FOMC signals ahead of its next meeting will set the backdrop; neither was known when the quarter's books closed.