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Friday Focus - October 30, 2026
10/30/26
FRIDAY FOCUS: Smart insight and clear visuals that matter – what we’re watching now and how intention and conviction shape our portfolios.
Markets
How Policy Shifts Could Impact AI and Markets
In the final full week before the November 3rd mid-terms, political risk is a factor for investors to consider. Rising energy costs, persistent inflation, and limited AI-driven economic benefits are fueling political uncertainty in the U.S. and abroad. That can lead to swings across financial markets, particularly when prediction markets and pollsters get it wrong.
A blue wave could increase the likelihood of more data center moratoriums as well as a general environment of heightened AI regulation. The market impact could be “a slowdown in the AI buildout, a rotation from AI capex takers to AI capex spenders. In a recent Bloomberg poll, more than 60% of respondents said if Congress can regulate AI more strictly, stocks will suffer over the ensuing 12 months as earnings expectations for big tech companies, which have been significant drivers of recent rallies, get tamped down.
High Yield
Refinancing Pressures Build for Lower-Rated Borrowers
Recent credit market performance highlights a growing divergence within U.S. high yield. The gap between current market yields and existing coupons has widened to approximately eight percentage points for CCC rated borrowers, compared with roughly one percentage point for BB and B issuers. This suggests that the weakest companies could face substantially higher interest expenses as debt matures, even without a significant deterioration in economic fundamentals. While broader credit conditions remain relatively stable, the divergence underscores the importance of credit quality and the potential for refinancing pressures to drive more selective defaults.
CCC capital structures face the largest increase in refinancing costs.
Source: Bloomberg and PIMCO as of October 22, 2026.
Trading
Quant Trading has Grown
A chart from Goldman Prime Brokerage highlights just how much quant trading has grown, rising 53% year-over-year and more than doubling since 2024. This may explain some of the heightened volatility we've been seeing in individual stocks.
Equity GMV of Hedge Fund Strategies, $tn, 2017-2026
Real Estate
Higher Rates Pressure Values, Not Credit
Commercial real estate continues to face valuation pressure from elevated real yields, but credit markets have remained relatively resilient. Unlike in 2023, when rising borrowing costs coincided with a sharp widening in real estate credit spreads and tighter lending conditions, investment-grade REIT and BBB CMBS spreads remain well below their previous stressed levels. According to PIMCO, this suggests that higher interest rates are currently exerting greater pressure on property valuations than on broad credit availability. While refinancing risks and property-specific challenges remain, particularly in weaker segments, the divergence highlights an important distinction between declining asset values and systemic credit deterioration.
Unlike in 2023, higher all-in yields haven’t resulted in a credit contraction in the real estate sector.
Source: Bloomberg and PIMCO as of October 22, 2026.
Economic Calendar: Week Ahead (Eastern Time)
Mon, 11/2 @ 9:45 am: US Manufacturing PMI
@ 10:00 am: ISM Report On Business Manufacturing PMI
@ 10:00 am: Construction Spending
Tues, 11/3 @ 10:00 am: Job Openings & Labor Turnover Survey
@ 10:00 am: Factory Orders
Wed, 11/4 @ 8:15 am: ADP National Employment Report
@ 8:30 am: U.S. Trade Balance
@ 9:45 am: US Services PMI
@ 10:00 am: ISM Report On Business Services PMI
Thur, 11/5 @ 8:30 am: Preliminary Productivity and Costs
@ 8:30 am: Weekly Jobless Claims
Fri, 11/6 @ 8:30 am: Employment Report
@ 8:30 am: Unemployment Rate
@ 8:30 am: Avg Hourly Earnings, M/M% and Y/Y%
@ 10:00 am: U. Michigan Prelim Consumer Survey
@ 3:00 pm: Consumer Credit
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.