The U.S. 10-year yield retreated to approximately 5.23% after strong Treasury auction demand, but remains elevated. European sovereign yields are also under pressure, particularly in fiscally vulnerable markets.

The Fed minutes showed a more nuanced split than the unanimous September vote implied. Some policymakers viewed the 25 bp hike as insurance against energy-driven inflation; others believed stronger underlying demand required tighter policy. Many argued a higher policy path could be prudent if inflation proves persistent. The Federal Reserve remains concerned about inflation following September’s rate increase. This means strong corporate earnings may not translate into higher share prices if discount rates remain elevated. This is particularly important for AI, utilities and REITs.

The power theme has strong demand visibility, but investors should distinguish contracted electricity revenue from speculative data-centre development plans. High bond yields also make leveraged utilities less attractive, even where long-term electricity demand is favourable.