Market Perspectives October 2026

Higher bond yields are creating more attractive entry points in fixed income, while equity-market gains remain concentrated in AI-linked technology stocks and call for broader diversification.

• The 30-year gilt yield reached 6% on 1 October, while 10-year yields rose 83 basis points in the US, 129 basis points in France and 66 basis points in the UK during the period discussed.
• US yields are being pressured by strong economic growth, expected Federal Reserve tightening and competition for capital from technology companies that have issued more than $400 billion of debt for AI infrastructure in 2026.
• Real yields are above 2%, the MSCI AC World Index has a prospective earnings yield of 6.1%, and W1M’s Global Credit Opportunities Fund and Enhanced Short Duration Bond Fund offer aggregate redemption yields of 7.2% and 5.4% respectively.
• Global earnings growth is projected at more than 30% in 2026 after 13% growth in 2025, while Asia ex-Japan earnings are expected to rise 78%, driven by semiconductor companies; Japan is up about 6% in both sterling and US-dollar terms and Brent crude rose 34% during the quarter.
• Market breadth is weak despite resilient indices: 80% of semiconductor stocks are above their 50-day moving average, compared with 25% of S&P 500 companies, and only about 40% of New York Stock Exchange stocks are above their 200-day moving average.
• W1M remains underweight bonds and technology, but identifies opportunities in under-owned sectors because earnings excluding the Magnificent Seven equal 11.5% of US GDP, the average stock trades near its 20-year valuation average and investor sentiment is not especially bullish.

Takeaway: Investors should begin to recognise the improved risk-reward in bonds while avoiding excessive concentration in technology-led indices and seeking broader equity exposure, although W1M remains cautious about the possibility that bond yields rise further and that market leadership changes.