REAL-TIME GLOBAL RESEARCH
INTERNATIONAL MARKET INTELLIGENCE | MORNING BRIEFING
Key takeaways
- 20 SECONDS: Some Tech respite, but Broadening extends.
- Digging deeper into Equities vs Rates debate.
- EU & China trade tensions escalate.
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Research evidence excerpt
OCTOBER 16, 2026
20 SECONDS: Some Tech respite, but Broadening extends. Digging deeper into Equities vs Rates debate.
EU & China trade tensions escalate.
Notable intraday reversal of Tech weakness yesterday, but tape was clearly one of Broadening.
Tech unwinding some of this morning’s gains, with EU vs US outperformance extending.
Busy week ahead: Fed & ECB enter blackout period; slew of China macro data; Merz speaks at Invest in Germany Summit; UK CPI; NVDA GTC, Global S&P PMIs. Key earnings incl. NFLX, TSLA, META, IBM, SAP, EU Luxury & Banks.
Main debate yesterday was on the equities vs rates dynamic. Despite another round of hot US data (PPI, Claims and Retail Sales to an extent), USTs extended their rally – down ~25bps vs Weds highs. Jay sees 3 reasons for this:
- Broad risk-off as the move in yields is finally affecting equity valuations;
- Positioning cleaner than expected (team’s latest Treasury Client Survey showed duration OWs had not been fully neutralized);
- A shift in Treasury debt mgmt strategy expectations (i.e. cut/discontinue long-term issuance) Broader risk-off could be an explanation for the equities move: de-grossing would result in a similar tape – Tech & MOMO unwind, and Broadening on short squeeze/funding reversal.
The other read is capex is the eye of the storm, as capital emerges as the key bottleneck. AI issuance became the key culprit for recent yield pressures, so Tech weakness & outsized move in Neoclouds (CRWV still at ~60% default prob) would support lower yields - despite hotter data.
Earnings remain key – are they enough to revive the trade? While Warsh refrained from monetary policy in his IMF remarks, he said ‘AI is a huge benefit to US economy’.
Europe and China tensions heating up as the EU prepares to create new trade powers that could completely shut off access to its single market, and considers extending EV cap to other sectors (machinery and chemicals amongst top picks).
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