Daily Market Briefing — 27 October 2026

Equities are stabilising, but the rotation has not reversed

US equities strengthened on October 27. SPY closed at 769.66, taking its 21-session return back into positive territory at 0.5%. It is now above its 50-day moving average of 766.70 and has gained 5.8% over 63 sessions.

The improvement extends beyond the headline index. QQQ closed at 721.25 and gained 0.5% over five sessions, although it remains 2.1% lower over 21 sessions and slightly below its 50-day moving average. IWM has gained 1.6% over five sessions and was approximately flat over 21 sessions, but remains down 2.7% over 63 sessions against SPY's 5.8% gain.

The underlying leadership is still very different from a conventional technology-led risk-on market. Energy has gained 9.8% over 21 sessions, utilities 9.2%, consumer staples 5.9% and consumer discretionary 5.9%. Technology remains down 2.6% over the same period, while communication services have fallen 6.8%.

Industry data show an even wider dispersion. Oil and gas exploration and production has gained a median 16.5% over 20 sessions, with 96% of the tracked group above its 50-day moving average. Consulting services are up 19.9%.

At the other end, semiconductor equipment and materials have fallen a median 21.8%, with only one of 11 tracked companies above its 50-day moving average. Other industrial metals and mining are down 27.5%, uranium 20.8%, computer hardware 17.4% and electrical equipment and parts 15.2%.

There are signs of short-term repair in some of these lagging groups. Computer hardware gained a median 5.5% over five sessions and industrial metals and mining gained 4.7%. That is not enough to establish a durable reversal, but it makes the internal picture less uniformly weak than it was several sessions ago.

The index has recovered more convincingly than the market's former growth leadership. The distinction matters because a stable S&P 500 can coexist with substantial changes in the economic exposures investors are rewarding.

Rates have eased substantially, but remain restrictive

The rates environment has improved materially over the past month.

The 10-year Treasury yield was 5.00% on October 26, unchanged from October 23 but 15 basis points below its level seven days earlier and 24 basis points below September 28. The two-year yield fell to 4.68%, down nine basis points over seven days and 24 basis points over 28 days.

Real yields have moved almost identically. The 10-year inflation-protected Treasury yield was 2.66% on October 26, down 14 basis points over seven days and 24 basis points over 28 days.

That decline reduces the marginal discount-rate pressure on equities and other long-duration assets. The absolute level remains exceptional. Both the nominal 10-year Treasury yield and the 10-year real yield remain around the 99th percentile of observations over the trailing decade.

The yield curve remains positively sloped, with the 10-year yield 32 basis points above the two-year. The latest broad trade-weighted dollar observation, from October 23, was 121.32. It was nearly unchanged over seven days but remained 0.8% higher over 28 days.

The direction of rates has therefore become less restrictive, but the level has not. That distinction remains central to the current regime.

Volatility and credit are improving, but have not returned to September conditions

The newest volatility data strengthen the case that recent stress is subsiding.

MOVE, which measures expected Treasury-market volatility, fell to 102.19 on October 26 from 103.31 on October 23. It is now only 0.37 points above its level 28 days earlier. This is a materially different picture from the temporary spike above 106 last week.

Equity volatility has also eased. VIX fell from 19.45 on October 23 to 18.39 on October 26, while VVIX fell from 109.70 to 101.43. The three-month VIX declined to 19.94.

The volatility curve remains normally upward sloping, with spot VIX below the three-month index. That is inconsistent with an acute near-term volatility shock. However, VIX remains 2.32 points above its level 28 days earlier and VVIX is still 10.41 points higher, so uncertainty has not fully returned to September levels.

Credit is showing a similar partial recovery. High-yield option-adjusted spreads narrowed eight basis points from October 23 to 3.30 percentage points on October 26. Investment-grade spreads narrowed one basis point to 0.90 percentage points.

Both remain wider than 28 days earlier. High-yield spreads are 28 basis points wider and investment-grade spreads seven basis points wider.

Rates, volatility and credit are now moving in a more constructive direction together. The remaining caution comes from levels and medium-term comparisons rather than continued deterioration in the latest observations.

The Federal Reserve decision arrives into conflicting signals

The Federal Open Market Committee began its two-day meeting on October 27, with the policy statement and press conference scheduled for October 28.

The Fed raised its target range by 25 basis points in September to 3.75%-4.00%, saying inflation remained elevated and that the increase would support a timelier return to its 2% objective.

The economic data available going into this meeting remain mixed. September headline CPI was 3.7% year on year, up from 3.4% in August, while core CPI increased to 2.6%. The latest core PCE observation, for August, was 3.0%.

Labour-market momentum has weakened. The three-month average payroll gain was approximately 51,000 in September and unemployment was 4.2%.

Energy adds another constraint. Brent crude traded above $116 a barrel on October 27 as renewed security threats around Saudi Arabia and the Strait of Hormuz offset diplomatic efforts to reduce regional tensions. Shipping disruptions and attacks remain a material supply risk.

That leaves the Fed facing weaker employment momentum and falling market yields on one side, but inflation above target and a continuing energy shock on the other. The October decision therefore arrives without a clean macroeconomic signal in either direction.

US liquidity remains a headwind

The latest complete US net-liquidity observation remains October 21, when the measure fell $61.4 billion over seven days to $5.81 trillion.

The main driver was the Treasury General Account, which increased $59.3 billion to $945.2 billion. Federal Reserve assets declined by approximately $2 billion over the same period.

Bank reserves moved in parallel, falling $59.5 billion in the week to October 21 to $2.96 trillion.

Over 28 days, net liquidity was still $8.3 billion higher, so the latest weekly decline is not yet a persistent monthly contraction. Over 91 days, however, the measure was $103.4 billion lower.

The reverse-repo facility is no longer a meaningful offset. Its latest balance was just $0.23 billion on October 27.

Funding markets remain orderly but have become marginally firmer. SOFR was 3.93% on October 26, three basis points above the 3.90% interest rate on reserve balances and five basis points above the 3.88% effective federal funds rate. Seven days earlier, SOFR had been three basis points below the reserve rate.

These are still small spreads, not evidence of funding stress. They are nevertheless worth distinguishing from the broader liquidity picture: system funding remains orderly even as reserve and net-liquidity measures have declined.

Bitcoin remains weak despite stabilising near $80,000

Bitcoin has stopped falling for the moment, but its short-term trend remains damaged.

The Binance BTC perpetual closed at $80,116 on October 26, effectively unchanged from the previous day but down 2.2% over seven days and 4.0% over 28 days. Kraken spot Bitcoin closed the 20:00-21:00 UTC hour at $80,678 on October 27.

Bitcoin remains below both its 20-day moving average of $82,034 and its 50-day average of $81,810. It is still 9.8% above its 200-day moving average.

The completed weekly picture is stronger. Bitcoin closed the week ending October 25 at $80,114, approximately 5.3% above its 50-week moving average.

IBIT also improved on October 27, closing at $45.70. It is now slightly above its 50-day moving average, but remains down 3.2% over 21 sessions and 2.2% over five. Its 63-session gain of 26.9% remains far stronger than the broader equity market.

The evidence therefore separates cleanly by horizon. Bitcoin's short-term trend remains corrective, while its longer-term trend has not yet broken.

Leverage is rebuilding while spot demand remains inconclusive

The derivatives picture changed again on October 26.

Binance open interest increased 2.5% in BTC terms to approximately 95,539 BTC. Across Binance, Bybit and OKX, covered dollar open interest increased by $354 million in one day to $15.17 billion. It was also $143 million above its level seven days earlier and $440 million higher over 28 days.

This is the opposite of the deleveraging seen on October 25.

Funding was positive across all three covered venues on October 26, while the Binance global long-to-short account ratio increased to 2.27 from 2.14. That ratio measures accounts rather than position sizes and cannot establish aggregate notional positioning.

Reported liquidations across the covered venues totalled approximately $17.9 million for longs and $12.4 million for shorts. Binance futures taker flow remained tilted toward sells, while Coinbase spot buy-minus-sell volume was also negative on the latest completed daily observation.

The combination does not establish a directional forecast. It does show that leverage has started rebuilding even though price has not recovered its short-term trend and the available spot-flow measure has not turned decisively positive.

Crypto liquidity continues to contract

The clearest negative signal within the crypto-specific data remains stablecoin supply.

Total stablecoin market value fell to $303.3 billion on October 27. It declined by $720 million in one day, $2.15 billion over seven days and $4.74 billion over 28 days.

USDT supply fell by $1.06 billion over seven days and $1.76 billion over 28 days. USDC declined by $993 million and $3.59 billion over the same periods.

Stablecoin supply is not a direct measure of money entering or leaving Bitcoin. It does, however, measure part of the dollar-like liquidity available within the crypto ecosystem, and its direction remains unambiguously negative.

USDT's share of total crypto market capitalisation was 6.68% on October 27. Because USDT supply itself is contracting, changes in that share should not be interpreted as evidence of fresh stablecoin inflows.

Current US spot Bitcoin ETF flow data remain unavailable. The latest complete observation is from September 25 and is too old to characterise late-October demand.

The regime is improving at the margin, not changing outright

The latest data are more constructive than the conditions seen during last week's stress.

SPY is back above its 50-day average. Treasury yields and real yields have fallen substantially over the past month. MOVE, VIX and VVIX have retreated from their recent highs. Credit spreads narrowed in the latest observation. Small caps have also improved over the past week.

But the opposing evidence remains substantial. Real and nominal long-term yields are still exceptionally high. Defensive and energy sectors continue to dominate 21-session leadership. Several cyclical and technology-related industries remain deeply impaired. US net liquidity and bank reserves have fallen. Crypto liquidity continues to contract, and Bitcoin remains below its 20-day and 50-day averages while derivatives leverage rebuilds.

The result is a partial easing of financial stress inside a regime that remains restrictive and highly selective. The latest observations weaken the case for an accelerating risk-off move, but they do not yet establish a return to broad risk-on conditions.