Monthly Viewpoint: October 2026
BIG THOUGHT
Most investors focus their attention on the stock market, but over the past month interest rates took center stage. The bond market tends to lurk in the background, yet seasoned investors know it can quickly become enormously important. In that span, the U.S. 10-year Treasury yield surged from about 4.5% to near 5.3%, the highest level since 2007. Many stock market segments corrected in response, even though the S&P 500 held fairly flat thanks to strength in a handful of mega-cap tech stocks.
Why do higher rates matter for stocks? They make it more expensive for individuals and companies to borrow, which can slow economic growth. All else equal, higher rates also make bonds a stronger competitor to stocks for new capital.
Still, higher rates bring real positives, especially for investors in or near retirement or those looking to diversify. In fact, bonds arguably offer their most attractive entry point in many years. That does not mean rates can't rise further, which would push bond prices down. But historically, the starting yield has been a strong indicator of an investor's eventual return. Sentiment toward bonds also looks stretched, so a pullback in yields would not surprise us. To learn more about incorporating bonds into your portfolio, please reach out.
Chart of the Month
Something interesting has happened over the past several months. The S&P 500 has remained fairly flat, and yet the valuation as measured by the forward P/E (green line) has declined by a decent amount. This can be explained by the continued strong increase in forward earnings expectations (blue line). Some investors seem to be concerned that the earnings story will crack, and stocks will follow, but we view that as pure speculation until there is evidence of it. In the meantime, current and expected future earnings are a tailwind for corporate growth and the stock market.
Greg Towner, CFA, CMT
Chief Investment Officer
Mr. Towner has worked in the investment industry since 1999 and received his MBA from the University of Central Florida and BA from the University of Mount Union. At Parallel he oversees the implementation of the firm's overall investment philosophy and is the Senior Portfolio Manager for several strategies. Prior to his current role Mr. Towner was comanager of large cap core and equity income portfolios totaling approximately $1 billion at Sterling Capital Management. He holds the designations of Chartered Financial Analyst and a Chartered Market Technician.
Brian Boughner, CFA, CMT
Principal
Mr. Boughner has worked in the investment industry since 2000 and holds a BS from Florida State University. He is a cofounder of Parallel, a Senior Portfolio Manager for several strategies and has developed the firm's quantitative tools. Prior to Parallel he had extensive experience with U.S. Trust, BB&T Wealth, Royal Bank of Canada (RBC Centura), Amsouth Bank, and Charles Schwab Co. Mr. Boughner holds the designations of Chartered Financial Analyst and Chartered Market Technician.
The information provided should not be considered a recommendation to purchase or sell any particular security. Parallel Financial reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. It should not be assumed that any of the securities transactions, holdings or sectors discussed were or will prove to be profitable. Investing involves the risk of loss of principal. Past performance is no guarantee of future results. The S&P 500 Index is unmanaged and is comprised primarily of large capitalization stocks. Parallel Financial Partners is a member of Fiduciary Alliance, LLC, a registered investment adviser. More information about the firm can be found in its Form ADV Part 2, available upon request by calling 864-385-7999 or emailing info@parallelfinancial.com.
135 S Main Street, Ste. 600, Greenville, SC 29601 · (864) 385-7999 · info@parallelfinancial.com
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