Investment Strategy | November 9, 2026

Higher bond yields, selective equity positioning, commodity exposure, and private real estate credit form Wells Fargo Investment Institute’s preferred multi-asset stance for the period ahead.

• The institute’s analysis of monthly Bloomberg U.S. Aggregate Bond Index data from January 1976 to October 2026 found a strong relationship between starting yields and subsequent annualized returns over 5-, 7-, and 10-year periods, with the relationship strongest over seven years.
• Wells Fargo prefers short- and intermediate-maturity bonds because its interest-rate forecast still points to rising rates through year-end 2027, while higher current yields can support income, diversification, volatility management, and cash-flow planning.
• October’s equity rotation saw the Nasdaq Composite fall 5.3% and the market-cap-weighted S&P 500 decline 0.9%, while the equal-weighted S&P 500 gained 5%; Energy rose 14.0%, Consumer Staples 11.4%, and Health Care 9.7%.
• The institute views the technology sell-off as a reassessment of artificial-intelligence spending and valuations, while earnings estimates continue to rise; it remains neutral on Information Technology and favors Communication Services, Industrials, and Materials.
• Diesel prices rose roughly 71% from October 31, 2025, to November 2, 2026, compared with increases of roughly 37% for regular gasoline and 58% for WTI crude oil, as tight inventories and refinery constraints limit supply responses and may add to core inflation.
• Private real estate credit generates contractual interest income through financing to property owners, with floating-rate loans, hard-asset collateral, and seniority in the capital structure providing a different risk and income profile from private real estate equity.

Takeaway: Investors can maintain bond exposure while limiting duration, use equity pullbacks to add selectively to Communication Services, Industrials, and Materials, and retain diversified commodity and private real estate credit exposure, while recognizing that higher rates may create near-term volatility and that diesel relief depends on refining capacity.