Top of the Morning: CIO Strategy Snapshot - Q3 earnings, oil prices, inflation data

UBS sees a narrow, churning rally masking broad stock weakness, with yields, oil, and hyperscaler capex sustainability as key near-term swing factors.

• Hidden market churn: Despite the S&P 500 sitting ~1% below all-time highs, 85% of index constituents are down more than 10% from their highs and 60% are down more than 20%.
• Rates driven by growth, not inflation: The 10-year yield is up 107bps YTD as markets price the Fed funds rate at ~4.1% by Dec 2026 (vs ~3% priced on Jan 1), with 90% of the move from real rates.

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