Market Chartbooks, October 2026 - Energy is last man standing
The latest market chartbooks and their accompanying data sheets for October 2026 can be found below.
US equity sectors (PDF) - Here
US equity sectors (Excel, view only) - Here
Global equities (PDF) - Here. (Apologies for the truncated rotational chart. This is due to huge outlier data in Korea (EWY) and Taiwan (EWT); will fix soon)
Global Equities (Excel, view only) - Here
Commodities (PDF) - Here.
October intensified the regime shift already visible in September. The month began with sovereign bonds still absorbing the combined effects of renewed monetary tightening, heavy supply, fiscal anxiety and a worsening energy shock. Ten-year US Treasury yields remained above 5%, long-dated European yields stayed under pressure, and the stronger dollar tightened conditions further for energy importers and emerging markets. Oil extended its extraordinary advance, while gold weakened and the previously dominant AI complex lost momentum. Pictet describes the preceding bond sell-off as the largest weekly Treasury decline on record, with ten-year yields above 5.2%, thirty-year yields above 5.5% and oil up almost 18% over the review period.
The more interesting development, however, was the change in cross-asset transmission. Early in the shock, higher oil and yields could still be read as reflationary. By late October, markets increasingly treated oil as a tax on consumption and margins: equity and credit volatility rose, the stock-bond correlation became less reliably negative, and rate expectations began to balance the inflation impulse against a potential growth hit. A cross-asset review by RS Trading Desk on 24 October characterised the month as a rotation from “AI-led growth” towards oil-driven stagflation, noting oil up roughly 15%, gold down 9% and cross-asset volatility more than doubling. This narrative fits the data in the October chartbooks; energy is the last man standing amid broadening weakness and volatility in erstwhile market leaders, which is now starting to drive headline market weakness.
The message is therefore not simply “risk-off”. It is a market of dispersion: energy leadership, weakening equity duration, defensive broadening within the US, and large country-specific shocks inside emerging markets. Diversification is still producing value, but it’s getting more difficult to find hiding spots. If energy rolls over; a more uniform defensive rotation likely becomes key to sustain performance or to avoid losses.
Equities: Energy leading plus event risk
The US sector data show a decisive change in leadership. Energy is now the sole outlier, outperforming the benchmark by roughly 48% over twelve months and improving by another 47 percentage points on the chartbook’s 90-day momentum measure. Technology remains approximately 14% ahead over twelve months, but its momentum has deteriorated by around 16 points. In other words, technology still owns the level; energy owns both the level and the impulse, and the former’s continued weakness at the end of October suggests that the second derivative is starting to dominate to the downside, despite a still-strong trailing performance for the tech/AI factor.
The second-order message is constructive breadth outside the former leaders. Healthcare, staples and materials have all improved, with healthcare approximately 10% ahead of the benchmark and showing a strong positive change in momentum. Staples are roughly flat on trailing relative performance but have improved sharply over the latest window. By contrast, consumer discretionary, homebuilders and utilities remain materially behind. Financials and real estate are still negative on the one-year comparison, although their momentum has begun to recover.
This produces a more defensive barbell than last month. The US risk-parity portfolio now combines healthcare, energy, technology, materials and staples; ex-US equities have dropped out and staples have entered. Its estimated return has fallen from 15.3% in September to 12.2%, while volatility has declined from 9.1% to 7.9%. The Sharpe ratio nevertheless slips from 1.68 to 1.54. That is not an optimizer discovering an efficient new bull-market frontier. It is a trend portfolio accepting less return to reduce exposure to weakening equity duration and domestic cyclicality.
There is a useful tension between the allocation methods. Both minimum-variance and tangency portfolios retain a full 20% allocation to VEU, alongside capped positions in selected US sectors. The minimum-variance portfolio produces a 14.6% expected return at 4.9% volatility; the tangency solution reaches 19.0% at 5.6%. Ex-US diversification is therefore still valuable in the covariance matrix even though it has disappeared from the five-asset momentum portfolio. The distinction matters: international equities continue to hedge US sector concentration, but no longer qualify as an undifferentiated trend trade.
Cross-correlations reinforce that point. Energy and technology carry unusually high common-factor exposure, while healthcare and staples remain less correlated with the dominant market cluster. Correlations are rising in financials, real estate, utilities and discretionary, however, suggesting that their apparent sector diversification could evaporate if the rates shock becomes a generalized growth shock.
The global chartbook is stronger in headline momentum but weaker in robustness. Korea and Taiwan remain the twelve-month leaders, ahead of the global benchmark by roughly 56% and 53%, followed by Peru and Norway. Yet Korea’s recent momentum has reversed dramatically; Taiwan and Peru have also decelerated. Norway is the cleanest upper-right-quadrant market—positive trailing relative performance with improving momentum—and its energy exposure provides an obvious link to the commodity book.
The global risk-parity basket has changed from Korea, Taiwan, Peru, Norway and Spain to Korea, Taiwan, Peru, Norway and Thailand. Its estimated return has dropped from 31.7% to 24.8%, volatility has risen from 20.3% to 22.2%, and the Sharpe ratio has fallen from 1.56 to 1.11. Norway carries the largest weight, at 33.5%, followed by Thailand at 25.3%. This remains a powerful trend portfolio, but it is less efficient and more exposed to country-specific discontinuities.
Indonesia and Brazil show why that qualification is essential. Indonesia’s EIDO is approximately 54% behind the benchmark over twelve months, an extreme outlier that cannot plausibly be explained by global beta alone. On 16 October, MSCI warned that Indonesia might no longer merit emerging-market classification, citing ownership opacity, coordinated trading and impaired price formation. The announcement triggered an 11.6% one-day fall—the largest since 1998—and a possible downgrade to standalone status if governance reforms are insufficient. Subsequent selling erased roughly $65 billion of market value, while regulators responded with proposed transparency measures.
This is fundamentally an investability shock: index eligibility, free float, ownership disclosure and confidence in market supervision. It is amplified by passive-flow mechanics as many portfolios automatically divest. Value investors are getting interested, but by the letter of the rotational framework in the charbooks here, Indonesia has been a poor pick despite showing extreme underperformance with the promise of mean-reversion.
Brazil’s shock was different. Lula’s unexpected re-election on 25 October forced a violent unwind of positions built around an anticipated right-wing victory and tighter fiscal policy. On 26 October the Bovespa fell 13.9%, the real lost 8.1%, sovereign CDS widened and the Treasury cancelled scheduled bond auctions. The underlying concern was the tension between additional spending commitments and debt stabilization, but the immediate drawdown was mainly a positioning event: markets had aggressively priced an electoral outcome which went the other way.
The chartbook’s trailing scatter partly conceals this. Brazil still appears close to positive relative performance over twelve months, whereas Indonesia sits at the bottom of the distribution. That contrast is a warning about measurement horizons. A one-year return and a 90-day momentum change can identify sustained trends, but they cannot adequately represent a fresh election gap, liquidity discontinuity or prospective index expulsion.
Neither Brazil nor Indonesia receives weight in the current global optimizer portfolios. Even so, their message for ex-US allocation is not that international diversification has failed. The shocks arose from different domestic mechanisms and were imperfectly correlated with each other and with developed-market beta. That is precisely why a diversified ex-US allocation can still reduce portfolio concentration. But “ex-US” should be treated as a collection of country, governance, liquidity and currency exposures—not one homogeneous asset.
Portfolio construction should therefore supplement backward-looking covariance with country caps, investability screens, event-risk budgets and explicit stresses for currency gaps and market closures. The optimizer’s continued preference for Germany, India and New Zealand in minimum variance, and for Taiwan, India, Germany, Italy and the UK in the tangency portfolio, supports diversification across distinct earnings and macro regimes. It does not justify buying every high-beta EM market indiscriminately.
Commodities: energy leads; the rest is a rotation problem
The commodity picture is even more concentrated. Energy has returned roughly 55% over twelve months, with 80% breadth, 80% positive momentum breadth and approximately 16 percentage points of benchmark contribution. Its relative performance has improved by about 37 points in the latest window. This is an unusually coherent trend: crude and refined products all occupy the upper-right quadrant, led by heating oil, Brent, WTI and gasoline.
Industrial metals are the only convincing secondary trend. The sector is up approximately 23%, every constituent remains above its long-term signal, and it contributes a little over two points to the benchmark. But only half the sector has positive recent momentum. Copper remains ahead of the commodity benchmark while decelerating. That is consistent with reflationary level signals being challenged by tighter financial conditions at the margin.
The internal energy relationships show that the supply shock is changing rather than ending. Heating oil remains about 40 percentage points ahead of WTI, although its lead has narrowed from around 60 points. Gasoline’s advantage over crude has largely disappeared. Oil’s relative performance versus natural gas remains extreme. The initial squeeze in refined products is therefore becoming a broader crude-led energy trend rather than continuously accelerating product scarcity.
Agriculture is mixed. Grains and oilseeds remain modestly positive with good long-term breadth, but only around 20% of the sector has positive momentum. Soybeans have improved against corn, while soybean oil is strengthening relative to beans. Softs remain negative in absolute and benchmark-relative terms, although their momentum breadth has recovered. Cocoa—still deeply depressed relative to the index but now improving—is the clearest contrarian candidate. It is a stabilization trade, not yet a confirmed trend reversal.
Precious metals offer little confirmation of macro fear. The sector is slightly negative, momentum breadth is zero, and gold has lost ground to silver. Meanwhile copper versus gold, industrial metals versus precious metals, and especially energy versus precious metals have all strengthened. The commodity complex is therefore signalling a real-resource shock rather than a generalized flight to monetary hedges.
That creates the central macro tension. Copper and broad industrial-metal resilience still look reflationary; energy’s overwhelming benchmark contribution, weak grains-versus-energy performance and deteriorating equity duration look stagflationary. My interpretation is that the market has moved from demand-led reflation to supply-led nominal growth, with the balance of risk migrating toward margin compression and policy error.
For trend followers, the hierarchy remains straightforward: retain energy exposure, keep industrial metals with tighter risk limits, and avoid prematurely fading the oil move solely because it appears extended. The credible contrarian opportunities are narrower—cocoa, selected soy relationships and eventually precious metals—but require confirmation from improving breadth. Livestock and most precious-metals trends remain too weak to justify bottom-fishing.
The broader conclusion is similar across both books. October has not eliminated diversification; it has exposed its conditions. Energy, defensive US sectors and selected international markets continue to diversify the fading AI-duration trade. But Indonesia and Brazil demonstrate that country allocation requires governance and event-risk discipline, while the commodity book shows how quickly apparently broad inflation exposure can collapse into one dominant supply-shock factor.
Disclaimer
This material above is provided for informational and research purposes only and does not constitute investment advice, an investment recommendation, or an offer or solicitation to buy or sell any financial instrument. The analysis reflects the data, methodologies and assumptions described in the relevant chartbooks and should not be relied upon as the sole basis for any investment decision. Past performance, historical relationships and model-based signals are not reliable indicators of future results.
Certain summaries and commentary accompanying these materials have been generated or assisted by artificial intelligence. AI-generated content is based on the underlying research materials provided to the system and may contain errors, omissions or misinterpretations. Such content should therefore be treated as analytical support rather than independently verified research and should be considered alongside the underlying data and charts.
Readers should conduct their own analysis and, where appropriate, seek independent professional advice before making investment decisions. The author may hold positions in the securities mentioned above, and more generally, may be invested in the broader themes through other means.