Friday, 10/9/2026 p.m.

• Markets rebound towards record highs – U.S. equity markets closed the week on a positive note with a broad rally in stocks helping overcome some lingering weakness among chipmakers. The S&P 500 was up 0.6% over the day while the Dow Jones Index jumped 0.8%, mirroring a positive tone in global equity markets. Global bonds also rallied to close the week, but U.S. government paper bucked this trend with a modest sell-off leaving 10-year Treasury yields at 5.24% at the end of the week. The dollar continues to move higher against a trade-weighted basket of currencies, capping a fourth consecutive week of gains in the Greenback.
   
• Bond market bumps continue – We continue to see big swings in bond markets, driven by oil prices, robust growth, sticky inflation, a hawkish Fed and high levels of federal debt. The U.S. benchmark 10-year yield peaked at 5.31% earlier this week, the highest seen since 2002. Higher long-term market interest rates have tightened domestic financial conditions and will weigh on growth, although this adjustment has been muted somewhat by strong corporate fundamentals, with equities remaining close to all-time highs and the spread between corporate and government borrowing rates still narrow. Outside the U.S., the big action has been in European bond markets, with yields on French bonds rising sharply in recent weeks as investors worry about local debt sustainability in the face of high government debt, large deficits and sluggish growth. Investors will hope to see signs of a stabilization in U.S. and global interest rates, with further increases in yields a clear risk to impressively resilient equity markets.
   
• Earnings and inflation data in the spotlight next week – Following a slow week on the data front markets will have more to digest next week. Top of mind will be CPI data, which is very likely in our view to show an acceleration in headline inflation in September driven by higher energy prices. Perhaps more important will be core inflation figures which exclude volatile energy and food prices and are thought to provide a better sense of underlying inflation pressures. A more moderate gain in this measure could tell the Fed that inflation will cool once the energy price shock washes out of the CPI index. Otherwise, retail sales will provide a sense of how U.S. households are managing this price shock, with consumers having been remarkably resilient in 2026 so far. Finally, next week will kick off the Q3 earnings season, with a range of large banks first in line to report. Robust earnings growth across a range of sectors has helped drive equity returns this year and should continue to support market performance going forward in our view.

James McCann;
Investment Strategy

^{Source for all data: Bloomberg}