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Friday Focus - October 23, 2026
10/23/26
FRIDAY FOCUS: Smart insight and clear visuals that matter – what we’re watching now and how intention and conviction shape our portfolios.
Markets
Bond Markets Signal a Shift Toward Capital Preservation
U.S. Treasuries are showing tentative signs of reclaiming their traditional role as a haven. As the AI trade comes under increasing pressure investors are once again seeking shelter. Last week, a notable selloff in the Nasdaq 100 prompted investors to rotate into Treasuries, driving yields lower. The market has not witnessed simultaneous drops of this magnitude in both tech equities and yields since the tariff turmoil of April 2025. This sudden bond rally is particularly notable because, for months, Treasuries have failed to provide their customary downside protection. Until recently, a mix of sticky inflation, a resilient domestic economy, and a deluge of government and corporate borrowing had pushed 10-year yields to multi-decade highs, even when equities struggled.
However, the macroeconomic narrative may be shifting. A sustained, AI-led market downturn could serve as a disinflationary catalyst, potentially contributing to lower interest rates over time. For now, the recent price action is sending a message: when you’re thinking about the preservation of capital rather than focusing on maximizing returns, it seems that US government debt remains one of the market's preferred safe-haven assets.
Tech
If Data Center Buildout is Delayed
With demand for AI computing capacity outpacing available supply, the pace of data center construction and deployment has become an important consideration for investors. While strong demand supports the long-term investment thesis, delays in securing power, completing construction, or bringing capacity online can create very different outcomes across the AI ecosystem. Understanding who benefits from prolonged capacity constraints and who bears the costs can help investors distinguish between businesses with near-term pricing power and those whose valuations depend on timely execution.
Source: Apollo
Global Bond Market
Japan and Foreign Bonds
Global bond markets are undergoing a historic structural shift as rising domestic yields prompt Japanese financial institutions to aggressively repatriate capital. Japan had been the marginal buyer of long-dated US Treasuries; today, that is no longer the case.
The catalyst is the repricing of Japanese Government Bonds (JGBs). With the 10-year JGB yield surging to roughly 3%, its highest level since the 1990s—domestic bonds are once again offering returns to local investors. Consequently, over the five months ending in August, large Japanese financial institutions snapped up $34 billion in JGBs with maturities of two years or more, marking their largest five-month purchasing streak since early 2023.
To fund this domestic pivot, Japanese institutions are rapidly offloading offshore assets. In September alone, Japanese banks dumped $16 billion in foreign bonds, their sharpest monthly sell-off since February. This capital flight has culminated in the largest nine-month liquidation of foreign debt by Japanese banks since 2005, signaling a profound and ongoing withdrawal of Japanese liquidity from global credit markets.
Inflation
The Inflation Battle May Run Through Housing Again
September's Consumer Price Index (CPI) report showed core inflation rising 0.3% for the month, with persistent price pressures in goods and non-housing services alongside renewed strength in shelter costs. Shelter accounted for roughly half of the monthly increase, with rent inflation recording its fastest monthly rise since October 2024, excluding April's data distortion.
Private-sector measures, including Zillow's Rent Index, also point to accelerating rents over the past three months. This is particularly concerning given that shelter has been the primary source of inflation moderation in 2026. Because shelter carries greater weight in core CPI than in the Fed's preferred core PCE measure, renewed housing inflation could reverse recent progress in CPI while broader inflation pressures remain elevated.
Economic Calendar: Week Ahead (Eastern Time)
Tues, 10/27 @ 8:30 am: Durable Goods
@ 9:00 am: S&P Cotality Case-Shiller Home Px Index
@ 10:00 am: New Home Sales
@ 10:00 am: Conference Bd - Consumer Confidence
TBA: U.S. Federal Open Market Committee meeting
Wed, 10/28 @ 8:30 am: Advance U.S. Trade Balance in Goods
@ 8:30 am: Wholesale Inventories
@ 8:30 am: Retail Inventories
@ 2:00 pm: U.S. interest rate decision
Thur, 10/29 @ 8:30 am: Weekly Jobless Claims
@ 8:30 am: Advance estimate GDP
@ 8:30 am: Personal Income, M/M%
@ 8:30 am: Consumer Spending, M/M%
@ 8:30 am: PCE Price Idx, M/M% and Y/Y%
@ 8:30 am: PCE Core Price Idx, M/M% and Y/Y%
Fri, 10/30 @ 8:30 am: Employment Cost Index
@ 9:45 am: ISM-Chicago Business Survey - Chicago PMI
The Team Behind Friday Focus
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Investment advisory services are offered through First Foundation Advisors, an SEC-registered investment adviser. FirstSun Advisors is a tradename used by First Foundation Advisors as it works to integrate names following its merger into the FirstSun Capital Bancorp family of brands. Registration with the SEC does not imply a certain level of skill or training. Investments and insurance products are not FDIC-insured, are not a deposit or other obligation of, or guaranteed by the bank or an affiliate of the bank, are not insured by any federal government agency and are subject to investment risks, including possible loss of the principal amount invested. FirstSun Advisors is a wholly owned subsidiary of FirstSun Capital Bancorp.