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The weekly letter2026-09-29 · 7 min

The bond market is betting the Fed wins.

Borrowing costs hit their highest since 2007 last week. Investors trust the Fed to beat inflation and expect two more rate hikes to do it. I think oil decides it: at most one more hike if there is a deal with Iran, at least two if there is none by the end of the year. Here is how I got there, and what it means if you save, borrow or own stocks.

Alex RomanoFounder, ALANRead

Figure in this letter

Why borrowing got expensive: the fee went up, the inflation part did not

2.85The fee for lending (real yield), Sep 24

The fee for lending (real yield)The part that covers inflation

The two pieces of the 10-year Treasury rate at the end of each month, December 31, 2025 to September 24, 2026, from FRED (the inflation-protected 10-year yield and the 10-year breakeven inflation rate). Together they rose from 4.18 to 5.18 percent. Almost all of that came from the fee, now at its highest since November 2008, while the inflation part is almost exactly where it started the year. Brass: the fee lenders charge on top of inflation. Blue: the part that covers inflation. Add them together and you get the 10-year Treasury rate.Source: fred.stlouisfed.org/series/DFII10

Standing theses

The S&P 500 closes 2026 at or above 8,000, from 7,650 on September 18, led by cash-rich mega caps2026-09-21

The gap between CCC-rated and broad high-yield credit spreads stays above 600 basis points through June 2027, and small companies with debt above three times earnings keep trailing the index2026-09-21

The Fed's next hikes depend on Iran: with a U.S.-Iran deal or ceasefire that reopens the Strait of Hormuz, announced by December 31, 2026, the upper limit of the federal funds target is 4.25% or lower on March 31, 2027 (at most one more hike); with no such deal by then, it is 4.50% or higher (at least two more hikes); from 4.00% today2026-09-29

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The weekly letter2026-09-21 · 9 min

The Fed raised the price of money. The S&P 500 sells it.

The Fed hiked for the first time in three years and stocks went up anyway. That is not a mistake. Earnings are compounding, the biggest companies are lenders, and the pain from higher rates lands on the borrowers at the bottom of the market. Here is what happened, what comes next, and what to do.

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