10/13/2026
Recap of Last Week
• U.S. stocks continued higher, with the S&P 500 and Nasdaq reaching new record highs, while small-cap stocks (Russell 2000) continued to lag.
• International markets were mixed:
o European equities declined modestly.
o Asian markets posted gains.
• Treasury yields surged midweek to new highs before easing by Friday, keeping interest rates and borrowing costs in focus.
• Energy markets faced supply disruptions from Hurricane Isaias, which temporarily shut in significant Gulf Coast oil and natural gas production. The expected impact on fuel prices was minimal, but broader geopolitical tensions in the Middle East and Russia remained the larger influence on oil prices.
• Investor sentiment became more cautious due to:
o Higher energy costs
o Elevated bond yields
o Geopolitical uncertainty
• This caution was reflected in:
o Broad equity fund outflows
o Weakening participation in the stock rally
o Increased movement into bonds and money-market funds
• Bond funds saw record inflows, indicating a shift toward safety.
• Despite overall equity outflows, investors selectively favored:
o Technology
o Utilities
o Industrials
• OpenAI's reduced revenue projections prompted greater scrutiny around AI-related spending, financing needs, and expected returns.
• Bitcoin and gold declined for most of the week before recovering on Friday.
• Federal Reserve meeting minutes reinforced a "higher-for-longer" interest rate outlook:
o Economic growth remains resilient.
o Inflation remains stubborn.
o Additional tightening remains possible if needed.
o No indication of near-term rate relief.
• Bond market volatility increased sharply:
o The MOVE Index ("VIX for bonds") rose significantly.
o The divergence between bond volatility and low stock-market volatility is the largest since last year's market turmoil.
• Economic data was mixed:
o ISM Services PMI remained in expansion territory, despite slowing.
o Consumer confidence fell 3.7% during the month.
o The Current Economic Conditions Index fell 12.2% month-over-month and 23.7% versus October 2025.
Week Ahead
• Markets will focus heavily on inflation, interest rates, credit conditions, and bank earnings.
• Wednesday's CPI report is expected to be the week's most important economic release.
• Bond markets are closed Monday for Columbus Day, while stock markets remain open.
• Major bank earnings begin Tuesday, including:
o JPMorgan (JPM)
o Goldman Sachs (GS)
o Wells Fargo (WFC)
o Citigroup (C)
• Investors will be watching:
o Credit quality
o Loan growth
o Trading revenue
o Deposit costs
o Consumer spending trends
• Thursday's PPI report will provide additional insight into inflation trends following CPI.
• A more bullish market backdrop could emerge if:
o CPI comes in softer than expected
o Oil prices remain contained
o Treasury yields decline
o Small-cap stocks begin participating in the rally
o High-yield credit spreads remain stable
o Crypto markets strengthen
o The U.S. dollar weakens
Recap of Last Week• U.S. stocks continued higher, with the S&P 50...