Atrani Capital

18/10/2026

US equities fell, but the decline was anything but broad. The S&P 500 lost 2.0%, its worst week since June, and the Nasdaq Composite slid 4.5%. Beneath the surface, the market moved the other way: the equal-weighted S&P 500 gained 0.5%, the Dow rose 0.7% and large-cap value climbed 1.0% as large-cap growth sank 4.3%.

The selloff swept through the entire AI supply chain. The Philadelphia Semiconductor Index fell for eight straight sessions, its longest losing streak since 2008, erasing about $1 trillion in market value. Equipment, memory, networking, server and AI power names all posted double-digit declines, but the companies funding the buildout fared far better: Microsoft and Meta slipped little more than 1%, and Apple rose.

Investors targeted the suppliers of AI infrastructure rather than its buyers, questioning whether the spending will earn an adequate return and how long it can last. Doubts had been building since the FT reported last week that OpenAI’s annualized revenue was $20 billion below what it had signaled and that the company had pushed its IPO into next year.

Worries about financing the buildout surfaced most clearly at CoreWeave. The AI cloud provider’s bonds due 2032, issued at par just four months ago, sank to about 78 cents on the dollar, and its credit-default swaps priced in more than a 60% chance of default within five years. The stock lost 25%.

Much of the selling appears to have come from hedge funds. According to Goldman Sachs’ prime brokerage, they net sold global AI stocks for five consecutive sessions. Long sales outpaced short sales by 3.5 to 1, a sign of liquidation rather than fresh bearish bets. Retail investors took the opposite side: the triple-leveraged semiconductor ETF SOXL drew a record $3.9 billion from Monday to Thursday.

The global ex-US index fell 1.7%, with losses concentrated in the markets most exposed to AI. Emerging markets slid 5.7%, led by South Korea (-15.1%) and Taiwan (-7.0%), and Japan lost 3.1%. Europe was the bright spot, rising 1.4% in dollar terms, as investors rotated out of the AI trade into defensive sectors.

The J.P. Morgan Global Composite PMI rose to 54.3 in September from 53.5, its sixth straight gain, matching the highest level since late 2021. Services hit a 40-month high of 54.5 as travel and tourism recovered. Higher energy and transport costs pushed services cost inflation to its highest since January 2023, and S&P Global expects global consumer inflation, 3.7% in August, to top 4% soon.

Crypto assets slipped for a third straight week: Bitcoin fell 0.9% and total market capitalization 1.5%. On Thursday, Bitcoin briefly dropped below $80,000, caught in the broader retreat from risk assets. Spot Bitcoin ETFs saw net outflows for a second consecutive week, losing $228 million.

CME FedWatch put the probability of an October hike at 15.5%, down from 17.7% a week earlier, and markets still price three hikes in December, March and June. Futures imply around 19 bp of cumulative tightening by year-end 2026, up from 18 bp, and 72 bp by year-end 2027, down from 80 bp. The small change in the October odds masked a sharp swing: Wednesday’s hotter-than-expected CPI report briefly lifted them to 55%, before Fed Chair Kevin Warsh said on Friday that the economy had “broadly conformed” to the Fed’s expectations. John Williams’ view that, for now, no hike is needed in 2027 pulled next year’s pricing lower.

The Treasury yield curve flattened as long-term yields fell sharply. According to Bloomberg, the 1-year yield nudged lower by 3 bp to 4.41%, while the 10-year yield declined 17 bp to 5.07% and the 30-year yield fell 18 bp to 5.42%. The biggest move came on Thursday, when a deepening selloff in AI-related shares sent investors into government bonds worldwide, and strong PPI and retail-sales data did little to slow the rally.

For comprehensive insights and deeper context, please refer to the full article.
https://atranicapital.substack.com/p/week-42-market-update-for-october-e67

15/10/2026

Fund managers sour on growth, keep buying tech

Global fund managers grew more cautious on the economy in October but kept their cash low. BofA’s broad sentiment gauge fell to 6.4 from 7.0, the lowest since June. A net 4% now expect a weaker global economy, the first negative reading in four months. Cash held at 3.9%, still within BofA’s sell-signal zone. Worries about rates eased sharply: a net 1% expect higher long-term yields, down from 15% in September, after the 10-year Treasury averaged about 5.3% during the survey. Managers said they would start moving from stocks to bonds at around 5.9%. A disorderly rise in yields remains the biggest tail risk, cited by 31%. Fears of an AI bubble and a hyperscaler credit event together drew 34%.

Bonds got the biggest monthly increase in allocation, and the underweight narrowed to a net 37% from 48%. Managers cut the US overweight to a net 11% from 25%. Banks fell 21 percentage points to a net 13% overweight. Technology went the other way, reaching a net 37% overweight, the most since August 2020. Consumer discretionary sank to a net 34% underweight, the deepest since July 2008. Long semiconductors is still the most crowded trade at 45%, though well below July’s record 82%. BofA’s contrarian picks are long bonds, REITs and consumer stocks, and short tech, banks and EM. The survey ran October 2–8 among 161 managers overseeing $453 billion.

Read the full article:

Global fund managers became more cautious about the economy in October but added to technology and bonds.

10/10/2026

A shorter edition this week while I’m traveling. The full macro coverage for both weeks will follow next week.

US stocks rebounded, and this time the gains were broader than the headline indexes. The S&P 500 rose 1.2% and the equal-weighted S&P 500 gained 1.6%, while the Nasdaq Composite lagged with a 0.6% advance as chipmakers pulled back. Nine of eleven sectors advanced, led by Utilities, Consumer Staples and Energy, and Technology was one of only two sectors to decline. Small caps did not join the rally, falling between 0.5% and 1.0%. Sentiment improved: the Fear & Greed Index rose to 45 from 31, its first Neutral reading since late August, although market breadth remained in Extreme Fear.

Global ex-US equities slipped 0.7%, weighed down by a 7.6% slump in South Korea, while Brazil jumped 14.0% after Flávio Bolsonaro’s surprise first-round election lead raised hopes of fiscal tightening and lower interest rates. Crypto assets fell for a second week, with Bitcoin down 2.4% and altcoins weaker still. Traders cut the probability of an October Fed hike to 17.7% from 22.1%, and Treasury yields edged lower, with the 10-year down 3 bp to 5.24% and the 30-year down 2 bp to 5.60%.

Coverage of economic data and macro news for this week will be included in next week’s update, together with the following week’s releases.

For comprehensive insights and deeper context, please refer to the full article.

Executive Summary

03/10/2026

US equities were mixed, and the gap between AI-related stocks and the rest of the market widened again. The Nasdaq Composite rose 0.5%, while the S&P 500 slipped 0.3%, the equal-weighted S&P 500 fell 0.7% and the Dow lost 1.3%. By our estimates, semiconductor and chip-equipment stocks added almost $350 billion in market value, including $214 billion from Nvidia alone. Micron was an exception: it barely moved even though quarterly revenue jumped 379% y/y to $54 billion, as guidance for a slight dip in its record 87% gross margin revived concerns about a cyclical peak in memory chips.

Rising yields kept pressure on the broader market, with the 30-year Treasury yield reaching its highest level since 2002, and US-Iran talks made no progress on reopening the Strait of Hormuz. Friday's weak payroll report gave stocks a lift, but that was not enough to turn the week positive.

Higher yields are also eroding the case for stocks over bonds. Wells Fargo's Ohsung Kwon estimates that equities make up about 72% of investor portfolios, the highest share since 1969, even though the S&P 500's earnings yield is now about 1 percentage point below the 10-year Treasury yield. Some investors may already be adjusting: bond ETFs took 42% of all ETF flows in September, their largest share in more than a year.

Global equities were mostly lower, with the global ex-US index down 1.1%, largely because the dollar gained about 1%. Europe was the weakest region: the Stoxx Europe 600 fell 1.1% in local currency, as rising bond yields added pressure. The UK 30-year gilt yield reached 6% for the first time in almost three decades, and France was the weakest major market, down 3.7%. Chip-heavy Asian markets held up better: South Korea gained 2.5%, Taiwan 1.4% and Japan 1.0%.

The J.P. Morgan Global Manufacturing PMI rose to 53.0 in September from 52.3, its highest since February 2022. New orders grew at the fastest rate since February 2022, driven mainly by AI infrastructure and defense spending, as well as stockpiling by customers worried about further price increases and supply disruptions from the Middle East war. Higher oil prices pushed input-cost inflation up, and strong demand let suppliers raise selling prices faster.

Crypto assets came under mild pressure, with total market capitalization slipping 0.6%. Bitcoin edged up 0.4%, while the market excluding Bitcoin lost 1.9% as altcoins gave back part of last week's outperformance. Inflows into spot Bitcoin ETFs slowed sharply to just $83 million from $2.4 billion a week earlier. After a rally of about 35% since mid-August, buyers appear to have paused rather than turned sellers.

CME FedWatch put the probability of an October hike at 22.1%, down from 64.2% a week earlier, and futures now imply around 20 bp of tightening by year-end 2026 and 84 bp by year-end 2027, down from 29 bp and 87 bp. John Williams and Vice Chair Philip Jefferson signaled no urgency to move in October, and softer core PCE and payroll data supported a more patient Fed. Still, investors delayed the next hikes rather than abandoning them, and now expect them in December, March and April.

The Treasury yield curve steepened again. According to Bloomberg, the 1-year yield held steady at 4.45%, while the 10-year yield increased 11 bp to 5.27% and the 30-year yield rose 13 bp to 5.62%. Softer Fed expectations anchored the front end but did little for longer maturities, which remained caught in a global bond selloff.

For comprehensive insights and deeper context, please refer to the full article.
https://atranicapital.substack.com/p/week-40-market-update-for-september-314

27/09/2026

US equities rose at the headline level, but the gains again came from a small group of stocks. The S&P 500 gained 1.2% and the Nasdaq Composite 2.1%, hitting a record on Tuesday. The equal-weighted S&P 500 slipped 0.2%, and most mid- and small-cap segments ended lower. By our estimates, semiconductor and chip-equipment stocks, together with Meta and Microsoft, added slightly more than the S&P 500's entire weekly gain.

The catalyst was AI news at Meta and Microsoft. Meta rose 12.9% after its Muse AI agent reached the top of Apple's App Store; the stock added $192 billion in market value on Monday alone. UBS argued that agents could give Meta a third way to earn money from AI, alongside advertising and subscriptions, by taking a share of the transactions they complete. Muse's early success also lifted chipmakers, as agents running continuous, multi-step tasks raise demand for inference and server CPUs. Intel (+13.3%), Qualcomm (+13.6%) and AMD (+12.7%) jumped, and AMD closed above $1 trillion in market value for the first time, while Nvidia gained just 1.3%. Microsoft added 4.5% after launching a Copilot "super app" with an autonomous agent. Heavier agent use will now be billed by consumption as well as per seat, giving Microsoft a clearer way to earn more as customers rely on its agents.

Global equities were mostly higher, with the global ex-U.S. index up 0.8%.

Business activity across the G4 economies accelerated for a fourth straight month in September. The simple average of the Flash Composite PMIs rose to 53.9 from 53.5 in August, a 53-month high, but the improvement was driven mainly by the US. The US Composite PMI jumped to 58.4, its highest since July 2021, with faster hiring and new orders, but also the strongest input-cost inflation since October 2022. The eurozone's Composite PMI rose to 53.1, the strongest since April 2023, whereas the UK slowed to 51.7 and Japan eased to 52.5. Inflation pressures remained elevated, especially in the US, eurozone and Japan.

Crypto assets continued to rally, with Bitcoin and total market capitalization rising 3.5% and 3.8% over the week, respectively. Most of the gain came on Monday, when more than $900 million of short positions were liquidated. US spot Bitcoin ETFs took in $2.4 billion over the week, enough to turn their 2026 flows positive. Open interest in perpetual futures reached about $160 billion, the highest since late October 2025, suggesting traders were chasing the move with new positions, which leaves the market more exposed to sharp swings in either direction.

CME FedWatch put the probability of a hike at the October meeting at 64.2%, up from 57.6% a week earlier, and futures imply around 44 bp of cumulative tightening by year-end 2026, up from 42 bp, and 102 bp by year-end 2027, up from 91 bp. The clearest trigger was the US Flash PMI, and Fed officials tied the case for higher rates directly to the strength of demand, citing energy prices and AI.

Treasury yields rose across all maturities, with the largest increases at the long end. According to Bloomberg, the 1-year yield rose 5 bp to 4.45%, while the 10-year and 30-year yields both climbed 16 bp, to 5.16% and 5.49%, respectively. The curve therefore steepened, reversing last week's flattening. Because longer maturities led the move, Fed expectations appear to explain only part of it. Bond investors largely attributed the selloff to an economy that has so far shown little sensitivity to higher borrowing costs, with the Atlanta Fed's GDPNow model pointing to annualized growth of 5% in the third quarter. Government borrowing and heavy AI-related issuance may also have contributed: Alphabet, Amazon, Meta, Microsoft and Oracle have issued about $223 billion of bonds this year, more than 40% of it with maturities of 20 years or longer.

For comprehensive insights and deeper context, please refer to the full article.

Executive Summary

26/09/2026

The largest long-Treasury ETF, TLT, closed at a record low this week as the 30-year yield hit 5.5%, its highest since 2004.

A Fed rate hike, higher oil prices and deficits of about $2 trillion a year explain much of the move, and the CBO's new scenario shows how quickly higher rates compound: debt could reach 222% of GDP by 2056 instead of 175%. AI adds pressure from two sides.

Data-center spending adds to demand the Fed is trying to cool, and hyperscalers have issued about $223 billion of bonds this year, much of it at 20 years or longer, competing with Treasuries for the same buyers. BNY data show pensions and banks cutting long Treasuries while banks add corporate bonds.

Read the full article:

The largest exchange-traded fund holding long-dated US Treasuries has never been cheaper.

22/09/2026

Meta’s new Muse assistant is giving investors an early look at how the company could turn massive AI spending into a consumer business.

Strong initial adoption, with US downloads topping 200,000 for three straight days and daily active users reaching 448,000 just 10 days after launch, helped fuel Meta’s 11.4% rally on Monday.

Muse is not clearly ahead of the strongest rival models on raw capability, but its Spark 1.3 model stands out for speed and lower benchmark costs, an important advantage for agentic workloads that require repeated model calls.

The bigger test is whether early usage can translate into durable engagement, subscriptions, transactions, stronger advertising returns or enterprise revenue — especially as Meta’s annual capex is expected to reach $130 billion–$145 billion.

Read the full article:

Meta launched Muse on September 8, and Wall Street initially shrugged.

20/09/2026

The broad US stock market retreated, but gains in several megacaps kept the headline indexes resilient. The Nasdaq Composite rose 0.7%, and the S&P 500 slipped just 0.1%, supported by Alphabet, Meta and Nvidia. By contrast, the equal-weight S&P 500 lost 1.3%, the Dow declined 1.7%, and small caps fell 2%, exposing narrow leadership as investors weighed further monetary tightening against strong corporate earnings. Global ex-U.S. equities lost 1.6%.

The Fed gave investors more reason to remain cautious. Its unanimous 25 bp rate increase to 3.75–4.00% came with projections pointing to another move this year. Kevin Warsh said policy was not yet restrictive, shifting the debate from whether the Fed would raise rates to how many increases lie ahead. CME FedWatch put the probability of an October hike at 57.6%, up from 36.0%, while futures priced 42 bp of cumulative tightening by year-end 2026 and 91 bp by year-end 2027, up 6 bp and 9 bp, respectively. The Treasury curve flattened: the 1-year yield rose 8 bp to 4.40% and the 10-year added 3 bp to 5.00%, whereas the 30-year eased 2 bp to 5.33%. The front end followed expectations for further hikes, but the 5-year breakeven rate fell to 2.31% from 2.41% as confidence in the Fed’s inflation commitment increased.

AI concerns added pressure early in the week. Anthropic’s Dario Amodei called for slower development of advanced models, with support from Sam Altman and Elon Musk, raising questions about the timing of investment and returns. Those concerns lost some force as technology stocks recovered. UBS argued that tighter safeguards would not end the investment cycle because wider use of existing models would still require more computing capacity. Company news also helped: Nvidia gained 1.8% after Jensen Huang said chip sales could double in 2027, Meta rose 2.7% on plans to deploy in-house AI chips next year, and Alphabet advanced 3.3% after Google avoided a forced breakup of its ad-tech business.

Earnings remain an important counterweight to higher rates. Every S&P 500 sector is expected to deliver third-quarter profit growth, the first such quarter since 2021. Data center spending is supporting demand beyond chipmakers, including cooling equipment, industrial components and power infrastructure. This gives the outlook broader support than the week’s narrow performance suggested, but exposes more industries to the same investment cycle if AI spending slows. Strategists differed over how much of that strength higher yields could offset. Ed Yardeni cut his year-end S&P 500 target to 7,900 from 8,400 by lowering his expected valuation multiple rather than his earnings forecast. Wells Fargo’s Ohsung Kwon reduced his target to 7,700, whereas Tallbacken’s Michael Purves raised his to 8,500.

Positioning complicates the cautious outlook. Citadel Securities’ Scott Rubner expects pressure through September as corporate buybacks fade and systematic funds retain positions they could cut if markets weaken. Yet he is more constructive on the fourth quarter: leverage in technology stocks has fallen and AI enthusiasm has cooled, leaving room to rebuild exposure if earnings continue to grow.

Crypto assets rallied, with Bitcoin up 5.0% and total market capitalization gaining 4.9%. The Senate’s failure to advance the Clarity Act triggered a sharp Tuesday selloff, although Galaxy Research had repeatedly warned that the bill was unlikely to pass. A late-week shift toward agency-led regulation mattered more for the weekly result. The CFTC submitted a crypto-market proposal to the White House for review, while the SEC opened a five-year exemption for qualifying tokenized-stock platforms. Bitcoin climbed back above $80,000 on Friday, and major altcoins rose even more as roughly $470 million of short positions were liquidated. The bill’s failure leaves the legislative framework unresolved, but markets appeared encouraged that regulatory progress could continue without Congress.

For comprehensive insights and deeper context, please refer to the full article.
https://atranicapital.substack.com/p/week-38-market-update-for-september-b17

18/09/2026

The September 2026 Bank of America Global Fund Manager Survey shows a clear cooling from August’s exuberance, though investors remain broadly constructive.

BofA’s sentiment gauge fell to 7.0 from 8.0, cash rose to 3.9%, and equity exposure eased from recent highs as managers trimmed risk for the first time since April. Growth expectations softened for a second month, but recession fears remain minimal, with 93% still expecting either a soft landing or no landing. The bigger shift is in rates: a net 36% now expect higher short-term rates, monetary policy is increasingly seen as too stimulative, and managers have turned sharply more bearish on bonds. A disorderly rise in yields has replaced an AI bubble as the top tail risk, underscoring how the market narrative has moved from growth optimism toward the consequences of persistently high nominal growth and tighter policy.

Positioning reflects caution rather than capitulation. Global equities remain heavily overweight, emerging markets gained further favor, and U.S. stocks are still firmly overweight, while Eurozone and Japan allocations slipped and bonds fell to their deepest underweight since 2022. Managers are also becoming much more selective within equities: a net 79% expect high-quality earnings to outperform, while banks, healthcare and industrials gained at the expense of REITs, staples and consumer stocks.

AI remains a major source of both earnings optimism and financial risk, with hyperscaler capex seen as the most likely source of a systemic credit event and semiconductors still the most crowded trade. September’s message is therefore less “risk-off” than “less room for error”: portfolios still depend on resilient growth and strong profits, but higher yields are becoming an increasingly difficult constraint on that bullish view.



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The September Bank of America Global Fund Manager Survey shows that investors remain broadly bullish, but rising bond yields are testing that optimism.

13/09/2026

Major US stock market indexes declined as rising Treasury yields added pressure to equities. The S&P 500 fell 0.8% w/w and the Nasdaq Composite lost 0.7%, but the retreat was considerably broader than those figures suggested. The equal-weight S&P 500 dropped 1.9%, the Dow fell 1.6%, and losses across small-cap segments exceeded 2%. The Magnificent 7 basket was almost unchanged, providing some protection for the headline indexes as the average stock continued to struggle.

Higher borrowing costs made the cautious outlook discussed last week more tangible. The 10-year Treasury yield rose 19 bp to 4.97%, finishing just below 5%, as higher oil prices and firmer inflation readings strengthened expectations of Fed tightening. Futures put the probability of a September hike at roughly 87%, up from 59% a week earlier, and brought forward expectations for a second increase to December. Higher yields reduce the value of future profits, make bonds more competitive and raise financing costs.

Several strategists see a growing risk of a correction. RBC’s Lori Calvasina warned that the likelihood of a 5%–10% pullback had increased, although she remained constructive over the next 12 months. JPMorgan Private Bank’s Grace Peters identified 5% on the 10-year Treasury as an important threshold, while Societe Generale’s Alain Bokobza put the pressure point nearer 5.5%.

Earnings remain an important counterweight. Aswath Damodaran notes that higher rates do not automatically mean lower stock prices if companies can offset valuation pressure through stronger revenues and profit growth. Analysts raised their S&P 500 earnings estimates for both 2026 and 2027 by more than 11% over the first eight months of the year. Bloomberg’s John Authers also observed that the index’s forward earnings multiple had fallen to about 19.4 from 23 last October. Investors are paying less for each dollar of expected earnings even as profit forecasts improve.

The speed of the bond selloff may matter as much as the level of yields. Damodaran found that the S&P 500 lost almost 0.5% on average on days when the 10-year yield rose more than 3 bp during January–August. More than two-thirds of respondents to Bloomberg’s latest Markets Pulse survey likewise viewed the pace of rising yields as more important than their absolute level. An abrupt repricing would leave companies and investors less time to adjust, especially if earnings begin to disappoint.

Global equities followed Wall Street lower, with the global ex-U.S. equity index falling 1.6% on the week.

Crypto assets diverged. Bitcoin fell 3.1%, dragging total market capitalization down 1.7%, even as the market excluding Bitcoin gained 0.6%. U.S. spot Bitcoin ETFs recorded $462 million of net outflows, while Ether ETFs attracted roughly $200 million.

According to CME FedWatch, the implied Fed funds curve shifted sharply higher. The probability of a hike next week surged to 87.3% from 59.4%, the expected timing of a second 25 bp increase moved to December from January, and markets began pricing a third hike next spring. Futures now imply around 36 bp of cumulative tightening by year-end 2026, up from 25 bp, and 82 bp by year-end 2027, up from 53 bp. The repricing followed firmer inflation readings that made it harder for the Fed to justify waiting.

Treasury yields rose across the curve: the 1-year climbed 21 bp to 4.32%, the 10-year 19 bp to 4.97%, and the 30-year 11 bp to 5.35%. The front end followed the sharper Fed path, while longer maturities were also pulled higher by the global bond selloff and heavy borrowing. The 5-year breakeven inflation rate rose only marginally to 2.40% from 2.37%, suggesting that higher nominal yields reflected not just inflation expectations but also rising real yields and term premium. Bessent’s expanded buyback program provided little offset to those broader forces.

For comprehensive insights and deeper context, please refer to the full article.

Executive Summary