The S&P 500 rose despite inflation and interest rate concerns. Gains were concentrated in technology and communication services, supported by strong uptake of Meta’s consumer AI agent and expectations of greater computing demand. Utilities and energy lagged, large-cap growth outperformed value, and the Russell 2000 declined. U.S. economic data remained strong. September’s composite PMI rose to 58.4 from 58.0, a 62-month high, while both initial and continuing jobless claims came in below expectations. Alongside hawkish Fed comments and reports of possible restrictions on U.S. diesel exports, the data reinforced inflation concerns and expectations of further rate increases. US Treasuries sold off after a weak five-year auction cleared at 5.033%, the highest yield since 2006. The 30-year yield climbed above 5.5%, and the 10-year briefly exceeded 5.2%. Investment-grade and high-yield credit spreads widened. The STOXX Europe 600 gained 0.50% in local currency terms as improving growth and AI optimism outweighed concerns about energy prices and further ECB tightening. Japanese markets opened for only two sessions because of holidays; the Nikkei 225 rose 2.07% and the TOPIX gained 0.92%. Bloomberg's Dollar Index rallied for the second week in a row (its best two-week jump since March) to its highest since July. While a strong dollar and real yields at their highest since 2008 weighed on bullion, bitcoin bucked the beating, rallying above $87k intraday during the week.
Have a great weekend
Charles & Syz Research Lab