Category: Newsletter

Markets welcomed the Democratic sweep of Congress with an initial relief rally, as lower yields, a softer dollar, and falling oil prices supported risk appetite. Attention has since shifted to sector-specific risks, with AI infrastructure and semiconductor stocks selling off sharply on concerns over tighter oversight and slower data-center expansion. With U.S. inflation data and earnings ahead, investors will watch whether cheaper energy eases inflation pressures while elevated valuations and policy uncertainty keep volatility elevated.

Markets confronted an AI-spending reality check as Alphabet, Amazon, and Intel suffered sharp selloffs triggered by negative free cash flow, revenue misses and heavy capex plans despite delivering strong cloud or AI growth. The Fed held rates steady amid stronger-than-expected growth and firm inflation, while elevated oil prices and geopolitical risks kept caution alive. Attention now turns to US midterms, the October jobs report, and further central-bank decisions.

Doubts over the payoff from massive AI spending triggered a sharp tech selloff, with Meta’s negative free cash flow weighing on sentiment. Oil surged on renewed Middle East tensions, while French borrowing costs climbed above 5%. Attention now turns to the Fed, US GDP and inflation data, and earnings from Microsoft, Alphabet and Amazon.

Hot inflation and surging oil have revived expectations of a Fed rate hike, pushing the 10-year Treasury yield back above 5%. The AI trade hit a debt-funding wobble, with leveraged names such as CoreWeave selling off sharply, while banks and defensive sectors held up better. We continue to favor quality balance sheets, diversified financials, high-quality income and measured energy exposure over debt-heavy growth.

Bond yields climbed to multi-decade highs as oil stayed above $100 amid Gulf attacks and hurricane-related supply risks, stoking inflation concerns. US stocks ended higher for the week, but a wobble in AI-linked shares exposed narrow market leadership. Meanwhile, renewed Saudi-Houthi fighting raised fresh risks to regional security and oil flows.

Markets turned a soft September jobs print into relief, as just 29,000 jobs added and a 4.2% unemployment rate slashed October Fed hike odds to 14%. Yet Treasury yields held near 24‑year highs and oil hovered around $100, keeping inflation and December‑hike risks firmly in focus for investors.

Markets digest a hawkish Fed echo as 10‑year yields breach 5%, while oil’s wild ride driven by Hormuz tensions and ceasefire hopes keeps inflation and rate expectations on edge. A Trump–Xi truce and AI‑led tech rally support risk assets, but this week’s PCE and jobs data will test conviction.

A Middle East escalation reshapes rate paths as the Fed, BoE, and BoJ all tighten amid oil-supply fears. Frontier AI’s “pace the frontier” accord triggers legal pushback and a semiconductor shakeout, supporting short-duration bonds, tactical gilts, and gold.

Markets confront a synchronized hawkish turn: the Fed, ECB and BOJ are all tightening together for the first time since before the 2026 easing cycle, with a ~90% probability now priced for a Fed hike on 16 September. Front-end Treasuries selloff and gold posts a third straight weekly decline as rising real yields outweigh geopolitical risk. Oil prices remain supported, pending resolution of the conflicts in the region. Concerns raised by CEOs of the major AI frontier companies regarding risks of AI will also be watched closely.

Markets shifted focus from earnings to macro as a blow‑out August jobs report (162k payrolls; 4.1% unemployment) lifted odds of a September Fed hike. US indices were flat to slightly lower, while oil surged on US‑Iran tensions and Treasuries sold off; gold lagged as real yields climbed.