Week ended Oct 9, 2026: markets volatile but better

Last week’s highlights included:

• US stocks roared to new record closing highs on Friday, shaking off recent market anxiety.

• Bonds came off the boil, with yields settling slightly while corporate credit remained stable.

• French bond yields continue to hover at elevated levels amid an unresolved political solution for the country's spending.

• Oil, gold, and the US Dollar were better bid, while the Yen continued its downward drift.

• University of Michigan consumer sentiment worsened slightly in October as the mid-term elections approach.

• Third-quarter earnings for S&P 500 companies kick off this week, with major US banks reporting. Some bellwether tech stocks (TSMC, ASML) also report earnings this week.

Markets last week

Markets were mixed for much of last week, but Friday ended positively as most global equity markets rallied into the close of the week. Both the S&P 500 and the NASDAQ Composite closed at record highs. Higher global bond yields have made equity investors more nervous, but bond-market volatility has not derailed expectations for another quarter of strong earnings. It is these expectations—alongside expected upside from the AI trade—that continue to support stocks as they climb higher.

Global bonds were volatile again last week. US Treasury yields peaked early in the week and then settled slightly, ending a few basis points lower across the curve. Aside from the trifecta of France, the UK, and the US—three countries dealing with idiosyncratic fiscal mismanagement issues of their own making—bond investors remain concerned more generally over higher yields due to elevated global inflation. Oil is the major culprit, attributable to the US-Iran conflict. The fact is that ordinary people everywhere are being increasingly squeezed by higher prices.

With yields settling in the US Treasury bond market last week, corporate bonds also found some stability following some sharp widening in credit spreads. Gold, the US Dollar, and oil finished higher on the week, while the Yen and Bitcoin lost ground.

The table below is a summary of activity last week and YtD. More detailed tables are at the end of this update.

Stocks bounce around but register gains: does this make sense?

I have found it difficult to fully understand how investors have largely been able to ignore the greater volatility and higher yields in the bond market. Stock investors do not seem to give two cents about higher yields. I suppose the AI trade and strong Q2 earnings (along with expectations for a repeat in Q3) have provided buoyancy, although sentiment remains volatile from session to session depending on the latest headlines. Even on days when equities are weak, like last Wednesday and Thursday, there are "buy-the-dippers" lurking in the background to step in and provide support. As bonds settled late in the week, it was these buyers that stepped in on Friday, pushing stocks to new record highs.

How did I respond in my portfolio?

I used mid-week weakness to partially unwind some put positions on CRWD and TSLA, cutting my losses on both positions. So much for betting against meme stocks. I also had a covered call position open on MSFT and lost shares on Friday as the stock surged to a record high. I love MSFT and advocated "backing up the truck and loading up” when the stock fell below $400/share earlier this year. This has proven to be a winning trade in a core position. However, since MSFT is now the largest position in my portfolio, I felt it appropriate to slightly lighten into Friday’s strength, with the stock closing at $535/share. My two cents is that Microsoft should be a core holding in any investor’s portfolio, although I would be cautious adding at this heady valuation.

What’s ahead that will drive sentiment?

Earnings kick off this coming week, led by the six largest US banks. JPM, GS, and WFC start things off on Tuesday before the open. Other notable companies reporting earnings this week include TSMC, ASML, JNJ, and UNH.

The next FOMC meeting takes place October 27–28, with a policy decision to be announced on October 28. The ECB (October 28–29), the Bank of Japan (October 29–30), and the Bank of England (November 5) closely follow the FOMC.

The most watched economic data to be released this week is September CPI on Wednesday and PPI on Thursday, marking the final inflation data points ahead of the FOMC meeting.

Fed Chairman Warsh will be interviewed by IMF Managing Director Kristalina Georgieva at the IMF meetings in Bangkok on Friday. This will be the final public commentary from a Fed official before the pre-FOMC meeting blackout period begins. You should be able to watch this live on the World Bank website, and the interview should provide critical colour on macroeconomic expectations heading into late October.

Markets Tables

**** I am transitioning slowly to Substack. You can find me on Substack here, and my new handle is Tims Take. Check it out, and subscribe. Thanks for your support. ****

Disclaimer: The thoughts expressed in this article represent personal portfolio actions and market observations. This content is for informational purposes only and does not constitute formal investment advice.