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Daily Commentary

Commentary prepared by Alloya Investment Services, a division of the wholly owned CUSO of Alloya Corporate Federal Credit Union. Alloya Investment Services is a leading broker/dealer consultant to credit unions.

Friday, October 23, 2026 at 7:30 am CT
Commentary prepared by Tom Slefinger, Market Strategist

Market Indications

10/19/26 Line chart titled “Historic Treasury Curves – Year Ago, 30 Days Ago, Current.” The x-axis shows Treasury maturities from 3 months to 30 years, and the y-axis shows yield percentage from 0% to 5.75%. Three yield curves are compared. The current yield curve (blue) and the 30-days-ago curve (green) are nearly identical, with yields rising from about 4.2% at 3 months to roughly 5.4% at 20 years, then easing slightly at 30 years. The current curve is marginally higher than the 30-days-ago curve across most maturities. The year-ago curve (black) is lower across all maturities, dipping to about 3.5% at 2 years before gradually increasing to approximately 4.6% at 20 to 30 years. Overall, Treasury yields are substantially higher today than a year ago, while changes over the past 30 days have been minimal.

Other Market Indicators

Market Indicators
2s/5s Tsy Spread0.13-0.01
2s/10s Tsy Spread0.31-0.01
2s/30s Tsy Spread 0.61+0.01
DJIA-30 52,856.09+0.69%
S&P-500 7,757.17+0.58%
NASDAQ26,792.86+1.05%
Dollar Idx 101.67-0.10%
WTI99.47+2.35%
Gold4,073.70-1.81%

Daily Commentary

Recap — Yesterday, Treasuries had their best day in more than a year. Yields fell 17 basis points to 4.96%, dropping below 5% for the first time since September 22. Growing doubts about AI returns sent investors looking for safety. That big of a move may also signal concern about where the economy is headed. Even a 2.4% jump in West Texas Intermediate (WTI) oil to $99.47 per barrel couldn’t push yields higher. This time, growth and credit worries outweighed inflation fears.

Line charts titled “Treasury Yields Take a Sharp Turn Lower” show the 10-year U.S. Treasury yield from October 2025 through October 2026. Monthly averages rose from 4.06% in October 2025 to 4.99% in September 2026. Daily October 2026 yields peaked at 5.31% early in the month before falling sharply to 4.96% on October 22, a 17-basis-point one-day decline.

Meta fell 7% despite glowing earnings headlines. IBM was down as much as 7% during the session after CEO Arvind Krishna said large companies are taking a harder look at what they’re getting for their AI spending. Some of it, he warned, is “completely out of control with no real return.”

His words, not mine.

The semiconductor index fell 6.7% to its lowest level since late July. The Nasdaq 100 dropped 3%, posting its steepest intraday decline since late June.

Markets also trimmed the odds of another Fed hike. October is nearly off the table, with odds below 10%. December odds fell to 80% from 90%.

Overnight, stocks remained under pressure, with U.S. futures modestly lower. WTI rose another 1% to $101.55 per barrel.

Meanwhile, everyone is focused on inflation, but housing tells a different story. The New York Times article “Home Prices Are Starting to Fall in Some Pockets of the U.S.” highlights price declines that have yet to show up in Consumer Price Index shelter readings. Core inflation excluding shelter is already running at 2.0%.

In October, 43% of builders cut prices, which was the highest share since the data began in 2020. The average cut was 6% for the seventh straight month. And price cuts don’t tell the whole story. Another measure shows 65% of builders offering sales incentives. That marks 19 straight months with at least 60% doing so.

Bottom line: Builders are cutting prices and sweetening deals. Housing is weakening, even if the inflation data hasn’t caught up.

Bar chart titled “Builders Are Cutting Prices” shows the share of builders reducing home prices from February through October 2026. The share fluctuated between 32% and 38% from February through September before rising to 43% in October, the highest level shown.

Stay tuned and have a great day!

Economic Calendar

October 19-23, 2026

10/19/26 - Table showing key U.S. economic releases scheduled for October 20-23, 2026, with forecast and prior-period values. October 20: Housing Starts for September are expected at 1.30 million, up from 1.275 million. Pending Home Sales for September are expected to decline 0.5% month over month, compared with a 0.3% increase previously. October 21: MBA Mortgage Applications for the week ending October 16 have no consensus forecast; the previous reading was -2.7%. October 22: Initial Jobless Claims for the week ending October 17 are expected at 200,000, versus 199,000 previously. Continuing Claims for the week ending October 10 are expected at 1.715 million, up slightly from 1.710 million. The September Leading Index is expected to decline 0.1%, unchanged from the prior month. October 23: Preliminary October S&P Global Manufacturing PMI is expected at 55.5, down from 55.9. Services PMI is expected at 58.0, down from 58.8. Composite PMI is expected at 57.4, down from 58.4. Final October University of Michigan Consumer Sentiment is expected at 46.3, unchanged from the prior reading. Overall, the calendar highlights housing, labor market, leading economic indicators, business activity surveys, and consumer sentiment, with forecasts suggesting stable labor conditions, softer PMI readings, and weak consumer confidence.

Future Fed Expectations

Source: Bloomberg

10/19/26 - Table showing market-implied Federal Funds rates for upcoming Federal Reserve meetings, along with the change from one week earlier. Data is as of October 19, 2026. The implied Fed Funds rate is 3.92% for the November 6, 2026 meeting and rises steadily to 4.61% by September, November, and December 2027. The implied rate then edges down to 4.58% for the January 28, 2028 meeting. Compared with one week earlier, market expectations changed little for near-term meetings, with a 0.01 percentage point decrease for November 2026 and a 0.01 percentage point increase for December 2026 and January 2027. Expectations for later 2027 meetings declined modestly, with changes ranging from -0.02 to -0.09 percentage points, indicating markets are pricing slightly lower future policy rates than they were a week ago. Overall, markets expect the Federal Reserve to continue raising rates from current levels through 2027, peaking around 4.61%, while recent revisions suggest a somewhat less aggressive rate path than previously anticipated.

10/19/26 - Line chart titled “Expected Fed Funds Path.” The x-axis shows Federal Reserve meeting dates from November 2026 through May 2027, and the y-axis shows the implied Federal Funds rate, ranging from 3.6% to 4.6%. The projected policy rate rises steadily over the period. The implied rate is approximately 3.92% at the November 2026 meeting, increases to 4.08% in December 2026, 4.15% in January 2027, 4.31% in March 2027, and reaches 4.48% by May 2027. Overall, the chart indicates that financial markets expect the Federal Reserve to continue raising interest rates through the first half of 2027, with no rate cuts anticipated during the period shown.

Select Probabilities based on the Futures
Probability of Fed Funds rate HIKE on October 28, 202615%
Probability of Fed Funds rate HIKE on December 9, 202688%

**All quoted rates are indications and are subject to change without notice.
* ISI is a member of the FINRA/SIPC.

The information contained herein is prepared by ISI Registered Representatives for general circulation and is distributed for general information only. This information does not consider the specific investment objectives, financial situations or particular needs of any specific individual or organization that may receive this report. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities. All opinions, prices, and yields contained herein are subject to change without notice. Investors should understand that statements regarding future prospects might not be realized. Please contact Alloya Investment Services to discuss your specific situation and objectives.