October 23, 2026
There was little in the way of economic data for market participants to digest this week, instead worries about funding artificial intelligence capex spending after Meta results drove a technology sell-off and a move into government bonds. Bond yields fell despite oil climbing to its highest levels since May as attacks tied to the conflict with Iran reached further into Saudi Arabia. Prolonged conflict and supply disruptions are keeping upward pressure on inflation and the Federal Reserve who meet next week.
On the data front, S&P Global’s preliminary composite Purchase Managers Index eased to 57.6 in October from 58.4, still firmly in expansion territory (i.e. over a reading of 50) with the employment component growing at the fastest pace since June 2022 while input costs also rose at their fastest since October 2022. Initial jobless claims declined to 194,000, the fewest since July, providing further evidence of labor market strength. The University of Michigan sentiment was revised up to 48.0 from a preliminary 46.3, while households still expect 4.7% inflation over the next year and 3.5% over five to ten years.
Housing weakened further, as builder confidence fell to 29, its lowest since 2012, and September housing starts dropped 5.2%, well short of forecasts, led by a 23.2% decline in the West. Weakness extended to the demand side with pending home sales sliding to 7.3%. With the 30-year mortgage rate at 7.32%, just below its 52-week high, slower sales and construction point to softer local revenue from development fees and property transfer taxes.
At the time of this writing, the 10-year yield is 4.99%, down 8 basis points on the week, and the 2-year is 4.70%, down 3 basis points. The S&P 500 is at 7,630.31, down 0.38%, a second weekly loss that leaves it lower for October.
The Chandler team expects at least one more quarter-point increase by the Fed this year, with December more likely than October. Rising oil prices, firm hiring and stubborn inflation expectations argue for it, though market pricing has nearly ruled out a move at next Wednesday’s meeting. In more volatile markets, we continue to manage client portfolios with an emphasis on credit quality, ample liquidity, and disciplined duration management.
Next Week: Chicago Fed National Activity Index, Durable Goods, S&P Cotality Case-Shiller Home Price Index, New Home Sales, FOMC Meeting, Personal Consumption Expenditures (PCE) Index, MNI Chicago PMI, Conference Board Consumer Confidence
Written by Dan Delaney, CFA, Deputy Chief Investment Officer