To The Moon

Long Term Rates Fell This Week, Easing Discount Rate Pressure on Asset Valuations, While Fund Flows and Commodity Performance Remained Divergent.The 10 Year US Treasury Yield Declined to 4.99%, and the 10Y Minus 3M Spread Narrowed to 77 Basis Points as the Short End Remained Firm. Latest ETF Data Show That Overall Inflows Slowed. Equity ETF Inflows Were Broadly Flat, With a Larger Share Going to Overseas Equities, While Bond ETF Inflows Nearly Halved. Meanwhile, Crude Oil and Copper Edged Higher, but Gold Continued to Weaken, Indicating That Lower Rates Have Yet to Produce a Broad Commodity Rally. The Durability of the Price Recovery Will Depend on Regional Inventory Trends in Oil and Copper and the Pace of Long Liquidation in Gold.

As of the US market close on October 27, 2026, the weekly performance of key assets was as follows:

Figure 1. Asset Returns by Asset Class

As macro expectations continue to swing, price moves alone no longer capture the main forces driving asset performance. Inventory changes provide a clearer view of physical supply and demand, while fund flows better reflect allocation preferences. We therefore assess the latest developments in US equities, US Treasuries, crude oil, copper and gold through the lenses of inventories and flows.

Equity ETF Inflows Hold Steady as Bond ETF Inflows Nearly Halve, Lower 10 Year Yield Narrows the Term Spread

Founded in 1940, the Investment Company Institute (ICI) is a leading association for the US fund industry. Its data cover about 98% of assets held by US funds registered under the Investment Company Act of 1940. Its fund flow data are therefore widely viewed as an authoritative gauge of subscriptions and redemptions in US mutual funds. ICI also publishes long running data on assets and flows for regulated funds in the United States and globally. Its consistent methodology and broad coverage make these data a common reference for brokerages, research firms and financial media.

In the week ended October 21, ETFs recorded combined net inflows of $45.82 billion, down 14.0% from $53.26 billion the previous week. Equity ETF inflows were broadly unchanged at $35.36 billion, compared with $34.74 billion previously, although the composition shifted modestly overseas. International equity ETF inflows rose from $5.06 billion to $7.54 billion, while domestic equity ETF inflows fell from $29.67 billion to $27.82 billion. Bond ETF inflows dropped from $19.04 billion to $9.57 billion, while municipal bond ETF inflows declined from $8.03 billion to $3.75 billion. Both were close to half their previous levels. Commodity ETFs reversed from net outflows of $850 million to net inflows of $690 million. Combined with lower long term yields, slower bond ETF inflows may reflect reduced coupon appeal and a change in the pace of new allocations after yields declined. The data remain insufficient to confirm weaker underlying demand.

Meanwhile, long term Treasury yields retreated from their early October highs as the curve bull flattened. The 10 year yield fell 32 basis points from 5.31% on October 5 to 4.99% on October 27. The 30 year yield declined 37 basis points from 5.67% on October 7 to 5.30%. In contrast, the 3 month yield edged up from 4.20% on September 30 to 4.22%, after reaching 4.28% on October 14. The 10Y minus 3M spread narrowed steadily by 32 basis points from 109 to 77 basis points.

The latest move featured a relatively firm short end and declines in long and ultra long yields. The 2 year yield fell 18 basis points from 4.88% to 4.70%, a smaller move than at the long end. The 1 month yield rose from 4.02% to 4.10%, while its spread to the 3 month yield narrowed from 18 to 12 basis points. The bill curve retained a positive slope, indicating that expectations for near term rate cuts did not strengthen materially. The decline in long term yields was more likely driven by a lower term premium. The 10s30s spread narrowed from 39 basis points on October 7 to 29 basis points on October 21 before recovering to 31 basis points on October 27. This also indicates that previous upward pressure at the ultra long end has eased.

From a fund flow perspective, the unusual outflow from equity mutual funds should be assessed alongside subsequent CIT activity. In bonds, the coexistence of mutual fund outflows and ETF inflows is more informative, as combined flows remained positive. The decline in long term yields coincided with slower bond ETF issuance, which may reflect a change in allocation timing as coupon appeal weakened. If long term yields stabilize further, redemption pressure on bond mutual funds could ease. For equities, investors should watch for a rebound in flows next week to determine whether the latest unusual outflow will persist.

Figure 2. US 10 Year and 3 Month Treasury Yields (Source: US Treasury)

$標普500ETF(SPY)$ $標普500(.SPX)$ $SP500指數主連 2606(ESmain)$ $微型SP500指數主連 2606(MESmain)$ $微型SP500指數2606(MES2606)$ $道瓊斯指數主連 2606(YMmain)$ $微型道瓊斯指數主連 2606(MYMmain)$ $道瓊斯(.DJI)$ $道瓊斯ETF(DIA)$ $納斯達克100指數(NDX)$ $NQ100指數主連 2606(NQmain)$ $納斯達克(.IXIC)$ $納指100ETF(QQQ)$ $微型NQ100指數主連 2606(MNQmain)$ $微型10年美債收益率主連 2605(10Ymain)$ $10年美債主連 2606(ZNmain)$

Key Assets

1. Crude Oil: Nationwide Draw Slows as Cushing Inventories Continue to Build

EIA data show that US commercial crude inventories excluding the SPR fell to 412.5 million barrels in the week ended October 16, 2026. Inventories declined by 3.06 million barrels for a third consecutive weekly draw, although the reduction was much smaller than the previous week’s 8.557 million barrels. Stocks stood 3.28% below their five year seasonal average. Cushing inventories rose by 987,000 barrels to 27.594 million barrels, marking a fifth consecutive weekly build. The increase slowed from 1.862 million barrels the previous week, while inventories stood 10.93% above their five year seasonal average. Nationwide commercial crude inventories were 2.44% below last year and 3.17% below the same period two years ago, with both deficits widening from the previous week. Cushing inventory growth from a year earlier accelerated from 20.94% to 29.97%, while stocks were 11.83% above the level two years ago. This highlights the continued divergence between declining nationwide inventories and rising stocks at the delivery hub. Inventories outside Cushing fell by 4.047 million barrels during the week, while Cushing’s share of total commercial stocks rose from 6.40% to 6.69%. Overall, the nationwide draw helps ease inventory pressure, although the pace has slowed. Continued builds at the WTI delivery hub remain insufficient to confirm a synchronized tightening in nearby physical supply and demand.

Figure 3. US Commercial Crude Oil Inventories (Five Year Range)

Figure 4. Cushing Crude Oil Inventories (Five Year Range)

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2. Copper: LME Restocking Lifts Total Inventories as Regional Divergence Persists

As of October 27, 2026, COMEX copper inventories rose to 801,000 short tons, or about 726,600 tonnes. Inventories increased by 9,085 short tons, or about 8,242 tonnes, from the previous week. Weekly growth accelerated from 0.54% to 1.15%, setting another five year high and showing that US inventory accumulation remains intact. LME copper inventories rose by 38,900 tonnes over the week to 272,700 tonnes, an increase of 16.65%. They were also 20.98% above their October 16 interim low, indicating a sharp acceleration in restocking. SHFE copper futures inventories fell 56.56% over the week to 6,458 tonnes and remained 73.37% below their August peak, showing continued domestic destocking. After conversion into metric tonnes, combined listed inventories across the three exchanges rose by 38,800 tonnes to 1.0058 million tonnes. Weekly growth accelerated from 1.74% to 4.01%, with most of the increase coming from LME.

COMEX’s share of combined inventories declined from 74.29% to 72.24%, indicating that the regional concentration of new stocks has eased. Overall, the divergence between builds at COMEX and LME and drawdowns at SHFE persists. However, LME restocking has lifted total visible inventories and renewed inventory pressure. The three exchanges have yet to enter a synchronized destocking cycle.

Figure 5. COMEX Copper Inventories (Short Tons; Source: Wind)

Figure 6. Shanghai Copper Inventories (Tonnes; Source: Wind)

Figure 7. LME Copper Inventories (Short Tons; Source: Wind)

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3. Gold: Inventories Continue to Decline as Speculative Long Liquidation Accelerates

As of October 27, 2026, COMEX gold inventories fell to 23.2 million troy ounces, down 200,000 ounces, or 0.85%, from the previous week. The draw doubled from 100,000 ounces in the prior week and pushed inventories to their lowest level of the year. Stocks were 36.09% below their year end level. Inventories had fallen by 4 million ounces in a single day on September 22 before stabilizing mainly between 23.4 million and 23.5 million ounces. The latest decline shows that destocking continues, although the pace remains relatively moderate.

The latest positioning data cover the period through October 20. Noncommercial long positions fell by 8,158 contracts, or 3.33%, to 237,142 contracts, marking a sixth consecutive weekly decline. Longs had fallen by only 103 contracts in the previous week, so the pace of liquidation accelerated sharply. Since the August 25 interim peak of 277,159 contracts, long positions have declined by 40,017 contracts, or 14.44%, reversing a significant portion of the previous accumulation. Overall, exchange inventories and speculative long positions are declining together. Inventory destocking has yet to attract additional long exposure. The clearer near term signal is the contraction in speculative bullish positioning, while lower inventories alone remain insufficient to confirm a broad recovery in gold demand.

Figure 8. COMEX Gold Inventories (Troy Ounces)

Figure 9. COMEX Gold Noncommercial Long and Short Positions (Contracts)

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Overall, the slowdown in ETF inflows was driven mainly by bonds. Equity ETF inflows were broadly unchanged, while international equity ETFs accounted for a larger share. Bond ETF inflows nearly halved as the pace of subscriptions slowed, although the data remain insufficient to confirm a sustained decline in demand. In inventories, the nationwide crude draw slowed while Cushing continued to build, showing that the delivery hub has yet to tighten alongside total stocks. Visible copper inventories rose to 1.0058 million tonnes as LME restocking lifted the combined total. Gold inventories fell to a yearly low, while noncommercial longs declined for a sixth consecutive week, reducing bullish exposure. Crude oil and copper prices rebounded, although inventories did not enter a synchronized drawdown. Gold also remained under pressure despite lower interest rates.

Looking ahead, fund flows should be monitored for whether slower bond ETF inflows persist and equity ETF inflows remain stable. In crude oil, the key question is whether Cushing inventory growth begins to slow. For copper, attention should focus on inventory trends following the latest LME restocking. For gold, investors should watch whether speculative long liquidation moderates. Lower long term rates help ease valuation pressure, but the durability of the rebounds in crude oil and copper and any stabilization in gold will still depend on subsequent inventory and positioning changes.

What will next week bring? We will see.