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Rates Return: Navigating the 5% Treasury Shift · The SPY Trader

• 0:00
  Hello everyone and welcome back to the Spy Trader podcast .
• 0:04
  I am your host , Barnaby Boots , and I am so glad you could join me for our afternoon update .
• 0:09
  It is 2:30 pm on Friday , September 18th , 2026 , here on the Pacific coast .
• 0:16
  We are wrapping up a week that has been quite a rollercoaster for investors as we all try to navigate this new higherforlonger interest rate environment .
• 0:25
  Looking at the markets today , the mood is definitely mixed .
• 0:29
  The S&P 500 , which many of you track through the SPY ETF , managed to inch up about zero point two percent to reach seven thousand six hundred fifty point five zero .
• 0:41
  Our friends over at the Nasdaq100 , ticker QQQ , saw a bit more life with a zero point four percent gain , ending at twentysix thousand five hundred twentytwo point five five .
• 0:54
  On the flip side , the blue chips in the Dow Jones Industrial Average lagged behind , slipping zero point two percent to fiftyone thousand six hundred eightytwo point six four .
• 1:06
  The big news that everyone is talking about is the Federal Reserve's move on September 16th .
• 1:12
  They decided to raise the federal funds rate by twentyfive basis points , which puts us in the range of three point seven five to four percent .
• 1:22
  This is a historic moment because it is the first interest rate hike we have seen in three years , signaling that the long pause we enjoyed is officially over .
• 1:31
  While the consumer price index for August held steady at three point four percent , that core inflation is proving to be very sticky and hard to shake .
• 1:41
  We also have to keep an eye on the global stage , where tensions have pushed Brent Crude oil prices above one hundred dollars per barrel .
• 1:50
  That high energy cost is a major concern for inflation moving forward .
• 1:54
  In the bond market , the tenyear Treasury yield hit the five percent mark today for the first time since late 2023 .
• 2:02
  This is creating a real headwind for stocks because higher yields make borrowing more expensive and make fixedincome instruments like the iShares 20 plus Year Treasury Bond ETF , also known as TLT , much less attractive to hold as their prices fall .
• 2:19
  When we look at the sectors , Technology , represented by the XLK , is really holding things together .
• 2:26
  It rose nearly one percent today , thanks to the massive rally in semiconductors and the ongoing boom in artificial intelligence infrastructure .
• 2:35
  It seems investors view AI spending as a nondiscretionary cost that companies just have to pay , regardless of interest rates .
• 2:44
  However , Real Estate is feeling the heat .
• 2:48
  The Vanguard Real Estate ETF , or VNQ , is underperforming because mortgage rates are climbing alongside that five percent Treasury yield .
• 2:57
  We saw this in the earnings from the homebuilder Lennar , ticker LEN , this week .
• 3:02
  Even though people still want to buy homes , the high borrowing costs are forcing builders to offer more incentives , which is really squeezing their profit margins .
• 3:12
  In the financial sector , the XLF is having a bit of a mixed reaction .
• 3:17
  While higher rates can help bank margins , people are worried that the sudden hike might slow down loan demand .
• 3:24
  In defensive sectors , Healthcare through the XLV ETF is seeing a quiet uptrend as investors look for stable earnings .
• 3:32
  We also had a big changing of the guard at Berkshire Hathaway .
• 3:36
  Warren Buffett has officially stepped down as Chairman to become Chairman Emeritus .
• 3:40
  His son Howard Buffett is taking over the chair , while Greg Abel continues to lead as CEO .
• 3:47
  The stock stayed resilient , which tells me the market is very confident in this longterm succession plan .
• 3:53
  Another interesting spot is Hyperscale Data , ticker GPUS , which is getting attention as a value play in the tech space because its holdings of Bitcoin and cash are actually a huge part of its overall market value compared to its stock price .
• 4:08
  Now , for some strategy and concrete recommendations .
• 4:12
  First , I recommend maintaining your core allocation in the Invesco QQQ Trust .
• 4:18
  Even with higher rates , the growth in AI is the best place to find returns right now .
• 4:24
  Tech giants like Microsoft and NVIDIA have massive cash reserves , meaning they do not need to borrow money and can actually earn more interest on the cash they already have .
• 4:35
  Second , consider a defensive move into Gold through the SPDR Gold Shares , or GLD .
• 4:43
  With gold prices hitting record highs near fortyfour hundred dollars an ounce , it is a great hedge against the inflation we are seeing from high energy prices and global tension .
• 4:53
  Third , you might want to look at a value play in the Financial Select Sector SPDR Fund , the XLF .
• 5:00
  As rates stabilize , the big six banks should see a nice boost in their earnings from lending .
• 5:06
  Finally , I would suggest being very cautious with longterm bonds like TLT and Real Estate through VNQ for a while .
• 5:15
  Until we see that tenyear yield stop climbing and show a technical ceiling , these assets will likely continue to struggle .
• 5:23
  Thanks for listening to Spy Trader , I am Barnaby Boots , and I will see you next time .