A Fright to Quality
October 26, 2026
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Investors moved into Treasuries last week as concerns about artificial intelligence (AI) spending and $100 oil weighed on stocks. The 10-year Treasury yield fell below 5% on Thursday for the first time in a month and ended the week at 5.00%, down from 5.08%.1 The S&P 500 Index slipped 0.5%, and the Nasdaq Composite Index fell 0.7%.2 Earnings were mixed but, overall, continue to be better than expected.3 Meta fell after raising its spending outlook, while SpaceX rose on its first profit.4 Treasury auctions remained orderly, with the 20-year bond and 5-year Treasury Inflation-Protected Securities (TIPS) sales clearing at multi-year-high yields.5,6
Risk appetite continued to decompress. High-yield spreads have widened from approximately 270 basis points (bps) in mid-September to roughly 338 bps.7 Stress was concentrated among heavily indebted AI-infrastructure borrowers, with CoreWeave's credit default swaps moving into distressed territory.8 Oracle’s 2066 bond (which is rated investment grade) is now the widest in the investment-grade index and trades wide to 88% of BB-rated bonds.9 Recently, the market has rewarded companies with strong balance sheets and penalized those funding growth with debt.
The week ahead is one of the busiest of the year. Anthropic publicly filed its S-1 Monday, a key step toward an initial public offering (IPO) targeted before Thanksgiving.10 The Federal Reserve (Fed) announces its rate decision on Wednesday, and markets expect no change.11 With Fed officials in their quiet period, Fed Chair Kevin Warsh's press conference is the main policy event. The first estimate of third-quarter gross domestic product (GDP) and September personal consumption expenditures (PCE) inflation are released Thursday.12 Treasury will sell $183 billion of 2-, 5- and 7-year notes, plus a 2-year floating-rate note, around the Fed decision.13 Earnings peak with Microsoft and Alphabet on Wednesday, Amazon on Thursday and Exxon Mobil and Chevron on Friday.14
Sources:
1,7,8Bloomberg
2Yahoo Finance – How major U.S. stock indexes fared Friday 10/23/2026; 10/23/26
3FactSet – Earnings Insight; 10/23/26
4TritonPoint Wealth – Investments Market Recap: Week Ending October 23, 2026; 10/23/26
5Helious – 20-Year Treasury Auction Results: Oct 21, 2026; 10/21/26
6Tipswatch – 5-year TIPS auction gets real yield of 2.367% on a strong day for Treasurys; 10/22/26
9JPMorgan; as of 10/23/26
10NBC News – Anthropic releases IPO filing ahead of highly-anticipated stock debut; 10/26/26
11,12,14TradingKey – The Week Ahead: Fed Rate Decision Looming as Microsoft, Alphabet, and Amazon Report Earnings; 10/24/26
13TFTC – Treasury Auction Calendar: Notes, Bonds & TIPS; as of 10/22/26
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