JPMorgan's miss and the 'cost of money'... Wall Street's 'generational' bond buy... The $40 trillion reason to be careful... Gold vs. Treasurys... Doc Eifrig's latest trade... Gabe Marshank on spinoffs...
The effect of higher yields is showing up...
We've written a lot to you lately about two-decade-highs in Treasury yields.
To recap, the trouble stems from a combination of factors, including the war in Iran and resulting inflation... competition from corporate bonds financing the AI boom... and expectations for Federal Reserve rate hikes.
The 10-year Treasury yield, for example, traded around 5.2% today. That's up from near 4% at the start of the war in late February.
These rising Treasury yields mean two things: Bond prices are dropping, and borrowing is becoming more expensive.
The impact of a higher "cost of money" is showing up in the market...
One clear example was this morning's quarterly earnings report from banking giant JPMorgan Chase (JPM).
The bank missed Wall Street analyst expectations, largely due to weakness in its fixed-income business. With bond prices falling, this segment generated "only" $5.4 billion versus the expected $6 billion.
However, JPMorgan Chase also raised its "net interest income outlook" for the fiscal year. That reflects the spread between the bank's short-term borrowing costs and the long-term lending rates that bring in income.
In other words, over time, the current rate environment will let JPMorgan Chase issue new, higher-interest loans... boosting its profit.
So the recent sharp rise in yields can hurt banks in the short term, like in the past quarter. But these shifts can also help the banks – and fixed-income investors – in the longer run. JPMorgan Chase shares bounced around today but finished the day slightly down.
Treasurys have fallen to tempting prices...
Many of the world's largest institutions are telling clients they're interested in buying government bonds again.
Long-dated U.S. Treasurys recently reached their worst 10-year rolling performance (down 2%) in 100 years. In response, Bank of America's Chief Investment Strategist Michael Hartnett noted a "generational entry point," or buying opportunity.
Jean Boivin, head of the BlackRock Investment Institute, the asset manager's research arm, wrote to clients in a note yesterday...
Higher yields and potentially excessive Fed tightening expectations create room to unwind our U.S. Treasury underweight – a mainstay for most of the last six years... Now, yields have reset toward our long-held higher-rates view, and we want to lock in some attractive income.
If today's market rates align with your goals and timeline, great... But with rates continuing to rise, bond buyers might be catching a falling knife...
The U.S. government has proved to be really good at one thing in the past few decades: driving inflation higher – and the value of our dollars lower. The trick is running deficits and employing short-term "fixes" whose consequences – like more inflation and fiscal trouble – take a few years or decades to kick in.
The U.S. debt has snowballed, big-time...
I (Corey McLaughlin) just wrote about this last week. With the national debt now above $40 trillion, America's interest costs account for almost 11% of U.S. government spending. That's just about the highest percentage in any market-based economy.
Net interest on the national debt is projected to more than double to more than $2 trillion by 2036, according to estimates from the Congressional Budget Office. That's after already having doubled from 2022 and nearly tripling from 2020 levels.
Meanwhile, fewer buyers want the U.S. Treasurys that will cover all this debt. Foreign central banks hold more gold than U.S. government debt.
It has gotten to the point where the Treasury Department is increasing its bond-buying operations to "make a market" for long-term debt, as Treasury Secretary Scott "The House" Bessent has put it. These are signs of a problem, as Dan Ferris wrote on Friday...
You see, total U.S. government debt has more than doubled over the past 10 years, from $19.7 trillion to more than $40 trillion today. The U.S. is running a deficit near $2 trillion, all of which must be financed with debt...
It's rapidly approaching the point where the U.S. will have to print money just to pay the interest on its massive and growing debt obligations.
Does that sound like a "generational" buying opportunity in U.S. debt? Does that sound like something you want to own for many years ahead? To me it sounds more like, as Dan wrote on Friday, the context for a "reset" of U.S. debt. As Dan sees it, and I agree, this change could significantly boost the dollar value of gold. Read more here.
Maybe it's recency bias, but so long as I've been writing in the Digest since the end of 2019, Treasurys have been one of the worst places to park money to try to beat inflation.
After rates hit rock-bottom levels in 2020 during the pandemic, inflation and yields have kept moving higher. They're not going to stop "just because."
The 10-year Treasury yield was close to 1% in 2021 and only 2.5% in the summer of 2022 before surging above 4% later that year as inflation remained persistent... Then it hit 5% in the fall of 2023, its most recent multidecade high until the latest surge.
As Dan wrote on Friday, we'd rather own real assets that can't be printed – like gold – to protect our dollars from inflation, even if those assets don't produce income.
The case for some stocks right now...
It's also a good time to buy stocks, but only the right ones. Longtime readers know which ones we mean... high-quality businesses that can make the most of whatever dollars are worth now and in the future, and which can reward shareholders with dividends, buybacks, and long-term value creation.
Better yet, you want to buy shares of these kinds of companies when they are "hated," when sentiment has turned against them, to get the greatest bang for your buck.
This is a big part of the concept behind Doc's StockTracker system, for example, which he debuted in Retirement Trader a few months ago.
As we've written before, our colleague Whitney Tilson has covered the "stealth bear market," in which most sectors underperform the trendy AI names. To Doc, the stealth bear market has opened up buying opportunities in multiple sectors as money rotates around the market.
In Doc's latest issue, published on Friday, he identified one such sector, and it might surprise you: real estate, including real estate investment trusts ("REITs"). As Doc wrote, the opportunity has to do with our theme of the day – interest rates...
Real estate has been punished recently because of higher interest rates.
The 10-year Treasury has been steadily climbing higher, and currently sits around 5.3%. When Treasury yields spike or stay elevated, bonds become competitive with REIT dividend yields. That leads income-focused investors to temporarily rotate away from the sector.
But these higher rates are now already "priced in," Doc wrote...
That means the sell-off in the sector is overdone... and likely headed for a turnaround.
"Stealth bear market" fears pushing down the real estate sector are overblown... Earnings growth projections for this year come in around 10% and then another 6% in 2027.
As he does in Retirement Trader, Doc recommended an options trade in real estate, targeting around 15% annualized returns as the sector has turned "cheap."
It's a rare opportunity and even a "back door into the AI boom," Doc says. It's one more thing we'd rather put our money into instead of Treasurys.
Existing Retirement Trader subscribers and Stansberry Alliance members can access the full issue right here to read more about what Doc and his team see going on beneath the surface of the market, and to get all the details of his new trade...
Doc's income-producing strategy has delivered a 94% win rate since he launched the publication in 2010, with as many as 211 straight wins along the way. If you're interested in joining him, click here to learn more and get started with a subscription today.
Here's another corner of the market to consider...
As we mentioned yesterday and as he wrote to you in the Masters Series over the weekend, Stansberry Research senior analyst Gabe Marshank is excited about the opportunity in one overlooked corner of the stock market right now.
Spinoffs.
These are underlying parts of larger companies that break and trade on their own... and many can perform very well. But as Gabe – editor of our Market Maven newsletter – explains, Wall Street institutions often won't touch them at all. That drives down their share prices far below their value.
This setup is the perfect opportunity for investors who know where to look and what to look for. Gabe has a simple five-part "scorecard" to identify the strongest of these opportunities. He explains more in a new, free presentation here.
It's the same strategy that's used by some of the world's greatest investors. And it's drawn from an investment setup that once made Gabe's former Wall Street firm more than $100 million. Learn more and see it in action now.
New 52-week highs (as of 10/12/26): AbbVie (ABBV), iMGP DBi Managed Futures Strategy Fund (DBMF), GitLab (GTLB), Hafnia (HAFN), Hagerty (HGTY), Philip Morris International (PM), Invesco DB U.S. Dollar Index Bullish Fund (UUP), Visa (V), State Street Energy Select Sector SPDR Fund (XLE), ExxonMobil (XOM), and Zebra Technologies (ZBRA).
In today's mailbag, thoughts on the war in Iran, which we covered yesterday, and appreciation for Dan's reply in yesterday's mail... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"I am on a cruise stopping today in Viet Nam, reading about the world giving the Houthis the same probability of success we once gave the Viet Cong." – Subscriber Jack K.
"Hi Dan, Thanks for the response to Darrell W.'s question. This has been a long-time question for me, too. It's details like this that make me happy – that help me understand the interconnectivity of U.S. and world finances and politics. Please keep this type of information coming our way." – Subscriber Nancy P.
All the best,
Corey McLaughlin with Nick Koziol
Baltimore, Maryland
October 13, 2026
