Last week, global bond prices lowered and yields rose broadly across the curve. The 30-year US treasury yield climbed 16 basis points higher to 5.49%, hitting over two-decade highs. The bond selloff was fuelled in part by robust economic growth data, repricing for a more hawkish Federal Reserve (Fed) rate path, all on a backdrop of persistent Middle East geopolitical uncertainty, which has elevated energy inflation risks. Meanwhile, mounting liquidity demands in private credit markets prompted a major asset manager to cap fund redemptions following an influx of investor withdrawal requests.

US economic activity surprised to the upside, with S&P Global’s September composite PMI accelerating to 58.4—its highest level in over five years—driven by robust output, employment, and new orders across private manufacturing and services. Notably, input costs rose at their fastest pace since October 2022, underscoring ongoing inflation risks. PMI data conveyed the US economy remained resilient to persistently high energy prices and rate pressures, while the US Treasury’s US$70 billion five-year note auction was met with historically weak demand, stopping at 5.033%—the highest yield for the maturity since 2006. 

Fed Governor Michael Barr signaled that inflation risks have escalated, noting further conversations surrounding rate hikes are likely needed and that inflation is not easing toward the 2% target in a timely manner. US swap markets are currently pricing in one to two additional rate hikes by year-end, following the Fed's recent policy tightening path and latest decision to raise rates by 25 basis points the week prior—marking the first increase since July 2023. Consequently, the monetary policy-sensitive two-year US Treasury yields moved 11 basis points higher to close the week at 4.86%. 

In private credit markets, against a backdrop of concerns regarding lending standards, valuation transparency, and quarterly redemption pressures, Apollo Global Management’s US$26 billion debt solutions fund capped quarterly redemptions at 5% as investors sought to redeem 14.7% of shares. Private credit funds, including those of Blackstone and Cliffwater LLC, have been capping redemptions at 5% in recent months amidst concerns with asset quality, infrequent valuations (particularly software exposed with AI disruption risk), and transparency. These redemption caps generally function to protect long-term strategies, allowing fund managers to maintain investment objectives without resorting to forced asset sales during volatile periods. Additionally, while private funds often offer an illiquidity premium through higher potential returns, investors must balance this against the inherent realities of these assets, particularly limited redemption windows and possible challenges accessing capital in a timely manner.

On Tuesday, the Nasdaq 100 reached its first record high since June, yet market breadth remains remarkably narrow. As illustrated in our chart, the cap-weighted Nasdaq 100 has significantly outpaced its equal-weighted counterpart since 2024. This divergence indicates that the index’s rally is heavily reliant on a small cluster of dominant technology stocks, rather than broad-based growth across all index constituents.

What does buying a passive Nasdaq fund get you today? In short, it provides a highly concentrated technology portfolio. The technology sector currently accounts for a massive 59% of the Nasdaq 100. To put this into perspective, the technology weighting is 39% within the S&P 500 and a mere 8% in the TSX Capped Composite. This means passive Nasdaq investors take on significant sector-specific exposure.

It is important to explore your portfolio to ensure it continues to meet your tolerance for risk. Sometimes, this means trimming positions and diversifying assets to protect against unexpected volatility.

Note: Sector weights as of August 31, 2026.