Bull Case Despite Yield Shock: PMI Strength and AI Support

Bond yields are rallying hard, yet equity risk appetite stays surprisingly resilient. The narrator leans toward a bullish thesis and uses QQQ as his showcase. He cites an October 16 expiry 712 call rising from 12 dollars to 44 dollars for roughly a fourfold gain.

September final S&P Global data show clear technology leadership across private activity. The technology index rose from 56.6 to 62.7, marking its fastest expansion since June 2021. This picture, confirmed by pmi.spglobal.com data showing broad strength, points to expanding activity across all seven monitored sectors.

Manufacturing also firmed as the September ISM index reached 54.5, extending expansion to nine straight months. New orders held strong at 55.3 while employment returned to expansion territory. That outcome, reported through prnewswire.com with a 54.5 headline reading and 55.3 new orders figure, signals net job gains despite AI driven restructuring.

Labor Market: The First Critical Test

The first critical test is whether labor softness turns into a sudden cliff. Private payrolls look soft on ADP measures, yet the three to six month trend suggests bottoming and rebound. This view, seen in the squawkdeck.com record of a 29 thousand payroll gain down from 133 thousand, shows the three month trend searching for a solid base.

The second critical test is how durable AI capital spending chains remain. OpenAI and Anthropic stand as end buyers, while CoreWeave, Nebius and Microsoft sit in the middle layer. Nvidia and AMD benefit at the chip level, although the narrator flags supply chain hot swap risk if funding priorities shift.

On rates, the 10 year yield settled near 5.25 to 5.32 percent and squeezed risk sentiment. The 2s10s spread moved into the 45 to 50 basis point yield shock zone. That picture matters because the acisresearch.com gauge placed the 10 year yield at 5.251 percent, its highest since June 2007, alongside a 30 year yield at 5.5704 percent.

Credit Spreads and Bond Pressure

High yield spreads widened toward 300 basis points, their widest since April. Investment grade spreads also stirred but stayed below 2022 stress levels. Even so, elevated nominal yields create added pressure through widening credit spreads on corporate balance sheets.

Retail buying in TLT continues, and the narrator argues the classic bond bear story may fail. That view is supported by benzinga.com data showing TLT near 77.48 dollars close to its November 2023 low and far below the 146.60 dollar peak of 2020, highlighting persistent retail dip buying. Bearish drivers include oil prices, deficits, heavier long end issuance, global supply, corporate supply and foreign selling; the Alphabet case stands out because the stocktitan.net record of 167.5 million plus 167.5 million depositary shares and a 532.6704 dollar cap price frames pressure from its 6.25 percent mandatory convertible preferred issue.

Commodity Signals and Portfolio Defense

The copper gold ratio is reversing a five year decline and creating a fresh pro growth narrative. Hawkish expectations around Warsh pressured gold and silver sharply lower. This episode is discussed in the bankofsingapore.com assessment that gold fell 12 percent and silver fell 30 percent after the Warsh news while a hawkish chair could still defend 2026 cuts, complemented by reuters.com analysis that the copper gold ratio rebounded from multi decade lows on AI driven resilience.

For defense, the narrator uses an electrical circuit and resistor analogy to favor balanced allocation . Around 30 percent equities complemented by private equity, real estate, credit and cash is presented as protection. Microsoft targets a 562 dollar breakout and Nvidia targets a 227 to 237 dollar breakout, while true euphoria has arguably not arrived yet.