THIS WEEK: 2nd MIXED-Risk week in a row. US Stocks MIXED, Foreign Stocks MIXED, Bonds UP and Gold DOWN

EXECUTIVE SUMMARY-- Bond Rally & Equity Rotation Continue

Fed week came and went without a monetary policy change, but odds still favor a rate hike in six weeks. US Long T-bonds (+0.4%) rallied for a fourth week aided by WTI crude prices pushing to $104 and Brent crude to $118 as December global rate hike expectations persist. The 10-yr yield dropped to 4.93%, and the cash yield slipped to 3.97%, keeping the 3m-10y yield curve at 96 basis points. US equity investors have been rotating out of the mega-cap high-flyers and into small value for a couple of weeks. For a second week, small caps (+1.3%) improved while large-caps (-0.6%) retreated. Among S&P strategies Value, High Dividend, Low Volatility and Equal Value have replaced Momentum and Growth as top choices. The Dollar (+0.1%) again rose fractionally, contributing to weakness in gold (-3.0%)., commodities (-1.4%) and the oil complex (-0.4%). Offshore, stocks were mixed but generally lower. Apart from a rebound in Europe (+1.4%), Latin American equities (-14.8%) tanked, Japan (-1.3%) fell, and Asia-Pacific (-0.2%) pulled back. The models are on hold this week pending stop-loss readings on SPY.

GLOBAL OUTLOOK POSITIVE (3 of 4, UP this week). The Baltic Dry Index is down on the quarter, but oil and copper prices and 10Y Treasury yield are higher, making the outlook positive as of 10/30/26.

US INFLATION: September PCE inflation slightly warmer. WTI oil prices up to $104, Brent to $118. Global inflation per the Fed Check (84) still warrants tightening.

US ECONOMY: Q3 GDP, Optimism, Durable Orders & Spending Strong, New Home Sales Weaker. Yield curve positive and steady this week. Recession chances a year out shrinking and minimal. Money market system healthy per SOFR. Above average US growth prospects. GDP Now estimate (Q4) at 3.2% as of 10/29.

FEDERAL RESERVE: Meeting this week, no policy change. 1st rate hike since 12/25 rate cut five weeks ago. Fed Check (84) remains hawkish. The Fed's balance sheet currently stands at $6.74 trillion, with the Fed Funds Rate at 3.75-4.00%. t At least one more Fed rate HIKE (73%) is likely by December.

INVESTMENT STRATEGIES: There are no model switches this week.

INDEX MODEL: HOLD US Large-caps (SPY) since 10/05/2026

THIS WEEK: 2nd MIXED-Risk week in a row. US Stocks MIXED, Foreign Stocks MIXED, Bonds UP and Gold DOWN

The best Global asset we monitor is US Large-caps (SPY). Positives: CI% is max. Technical strength is max and bullish (>60), and PMO is positive (>0). Negatives: PMO is weak and deteriorating. RSI is bearish (<50). SPY also touched a 20-day low (stop-loss) intraday this week for a second straight Friday, this time closing the week below it.

BEST ALTERNATIVE: SGOV (cash) is the only other ETF in this model with a positive CI%, a TS+ greater than 50%, and a positive PMO.

Strong gold kept the Index model in bullion to start 2026, with GLD outperforming all equity asset classes through the first quarter. The model rotated into EEM in late Q1 as emerging market momentum accelerated and gold's relative strength began to fade. After the rotation, EEM added meaningfully to the year-to-date advance until US rate hikes strengthened the Dollar and SPY.

THE GLOBAL INDEX MODEL has been around for 34-years in one iteration or another. It is a momentum-based market timing model the latest version of which compares the relative strength of ETFs representing US stocks (SPY, IWM) and international stocks (EFA, EEM) along with US Treasuries (SHY, EDV) and Gold (GLD) in order to pick the single best asset class in which to invest your money. The model is updated weekly and the current recommendation is published each weekend in the Decision Moose newsletter.