Catalyst Funds
Rational Funds
Strategy Shares
Election Trepidation
October was marked by continued volatility across fixed income and equity markets as investors faced various challenges, including persistent inflation concerns, rising yields, tightening monetary policy, and the backdrop of a U.S. Presidential election. U.S. Treasury yields saw substantial gains, with the 10-year yield reaching levels not seen since the early 2000s. This increase was primarily driven by hawkish statements from the Federal Reserve and stronger-than-expected economic data, reinforcing expectations that rates will remain elevated for an extended period to combat inflation. As a result, longer-duration bonds faced headwinds, underperforming throughout the month. Investment-grade corporate bonds also struggled, with credit spreads widening modestly due to growing recession fears and concerns in certain sectors. Conversely, high-yield bonds showed some resilience, buoyed by stronger-than-expected earnings from select companies that helped alleviate broader investor anxiety.
Equities in October experienced mixed performance, weighed down by concerns over higher interest rates and the potential for an economic slowdown. The S&P 500 was volatile, driven by fluctuating earnings reports and persistent macroeconomic uncertainty. A rally in growth stocks at the start of the month quickly met skepticism as investors grew wary of overvalued sectors in an environment where the cost of capital is rising. While the tech sector showed some strength, other sectors—particularly consumer discretionary and industrials—underperformed. The shift toward value stocks was evident, with energy and financials benefiting from higher oil prices and broader interest rate spreads.
The Nasdaq Dorsey Wright Explore portion of the HANDLS Indexes experienced negative performance across all categories in October. Interest-rate-sensitive sectors struggled the most, while more equity-like categories showed relative resilience. The worst performer was REITs, which lost more than 3.5% for the month but remained positive year-to-date.
Overall, all HANDLS indexes posted negative returns in October:
- Nasdaq 5HANDL™ Index: -1.92%
- Nasdaq 7HANDL™ Index: -2.62% (1.3x leveraged)
- Nasdaq 10HANDL™ Index: -4.25% (2.0x leveraged)
As we move into the final stretch of the year, the impact of higher interest rates and a new election mandate will continue to influence performance, with a focus on how each sector navigates these headwinds.
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