Macro Rotation: DeepSeek's picks for 2026-09-25
DeepSeek picked XLE, XLV, XLF, TLT, XLK, XLU for a 1-day horizon. Long-short spread: +1.26%. Sides called correctly: 83%.
| Experiment | Macro Rotation |
|---|---|
| Model | DeepSeek |
| Prompt version | macro-rotation-v6 |
| Asked | |
| Horizon | 1-day |
| Measured from | 2026-09-25 |
| Measured to | 2026-09-28 |
| Benchmark | SPY |
| Status | Settled |
| Long-short spread | +1.26% |
| Sides called correctly | 83% |
| Benchmark return | -0.53% |
The picks
| Rank | Symbol | Side | Price change | Return in the called direction | Confidence | vs benchmark | Called right |
|---|---|---|---|---|---|---|---|
| 1 | XLE | long | +0.64% | +0.64% | 78% | +1.16% | Yes |
| 2 | XLV | long | +0.85% | +0.85% | 74% | +1.38% | Yes |
| 3 | XLF | long | -0.28% | -0.28% | 70% | +0.24% | No |
| 4 | TLT | short | -0.68% | +0.68% | 82% | +1.21% | Yes |
| 5 | XLK | short | -1.66% | +1.66% | 68% | +2.18% | Yes |
| 6 | XLU | short | -0.23% | +0.23% | 65% | +0.75% | Yes |
The model's market view
The macro backdrop is dominated by a hawkish Fed and surging Treasury yields. The FOMC raised rates to 3.75%-4.00% on 2026-09-16 and the dot plot implies one more 25bp hike by year-end, with no cuts on the horizon. The 10-year yield has pushed above 5.17% and the 30-year above 5.48%, both at multi-decade highs, as the bond sell-off reflects stronger growth expectations rather than inflation breakevens. Oil prices remain elevated above $95 WTI, supporting the energy sector, while gold holds near record levels above $4,270/oz. Equity markets are holding up despite the yield spike, but Barclays warns that rising yields make equities a less obvious choice relative to bonds. Sector rotation is favoring energy, financials, and healthcare, while long-duration bonds, utilities, and high-multiple technology face headwinds from the rate environment. For the next session, I favor longs in energy (XLE), healthcare (XLV), and financials (XLF), and shorts in long-duration Treasuries (TLT), technology (XLK), and utilities (XLU).
Why each pick
XLE
Energy is the year's standout sector, with XLE up over 30% YTD. Oil prices remain elevated above $95 WTI and Brent above $107, driven by supply constraints and geopolitical risk. The sector benefits from the inflation trade and the rotation away from rate-sensitive growth and bond proxies. XLE closed at $57.55 on 2026-09-25, up 0.75% on the day. The ETF has a 52-week range of $42.05-$63.46 and a yield of 2.61%. Rising yields are less damaging to energy than to utilities or technology because energy companies generate strong free cash flow in a high-oil-price environment. Risks: a sharp reversal in oil prices, demand destruction from a global slowdown, and the possibility that the sector has already priced in much of the geopolitical premium.
XLV
Healthcare is a defensive growth sector that has been gaining momentum, with pharma, biotech, and life sciences adding 16.2% over the past three months. XLV closed at $162.57 on 2026-09-25, near its 52-week high of $164.48. The sector offers a combination of earnings stability, innovation-driven growth (GLP-1 drugs, oncology, medical devices), and relative insulation from the rate cycle because healthcare demand is less discretionary. The rotation from dividend ETFs into growth sectors includes healthcare. Risks: drug pricing regulation, pipeline failures, and the possibility that the sector's recent outperformance reverses if growth stocks come back into favor.
XLF
Financials benefit directly from higher interest rates through wider net interest margins. XLF closed at $57.98 on 2026-09-25, up 0.29%, and has a 52-week range of $47.67-$58.41. The sector is levered to stronger nominal growth and a steeper yield curve, both of which are present in the current environment. Insurance stocks have gained 14.1% in the past three months, and the broader financial sector is participating in the rotation away from bond proxies. Risks: credit deterioration if rates stay high for long, regulatory pressure, and the possibility that the yield curve flattens in a way that hurts bank profitability.
TLT
TLT hit a record low of $79.71 on 2026-09-24 as the 10-year yield broke above 5.11% and the 30-year approached 5.48%, both at multi-decade highs. The Fed's hawkish stance, with one more hike expected by year-end and no cuts on the horizon, continues to pressure long-duration bonds. TLT closed at $81.79 on 2026-09-25, up 1.13% on the day, but the trend remains firmly lower. The ETF is down over 50% from its 2020 pandemic-era high. The bond sell-off reflects stronger growth expectations, not just inflation, which means the Fed is unlikely to pivot to cuts soon. Risks: a sudden risk-off event or weaker economic data could trigger a sharp bond rally, and TLT is already deeply oversold with an RSI of 33.65.
XLK
Technology is the most rate-sensitive large sector, and with the 10-year yield above 5.17%, the discount rate applied to long-duration growth stocks is rising. XLK closed at $180.37 on 2026-09-25, up 1.04%, but the sector faces headwinds from the Barclays warning that rising yields make equities a less obvious choice. Software stocks have struggled for most of 2026 while semiconductors have led, but the broader technology sector is vulnerable to a rotation into value and cyclical sectors. Risks: a sudden decline in yields would boost technology, and AI-driven earnings momentum could continue to support the sector despite the rate headwind.
XLU
Utilities are a classic bond proxy and are particularly vulnerable to rising long-term yields. With the 30-year yield at 5.48%, the dividend yield offered by utilities is far less attractive relative to risk-free Treasuries. XLU closed at $41.22 on 2026-09-25, down 1.13% on the day, and has a 52-week range of $41.31-$47.73. The sector is also facing pressure from the rotation out of defensive dividend payers into growth and cyclical sectors. Risks: a sharp risk-off event would make utilities defensive again, and any decline in yields would make the sector's dividend yield more attractive.
Other models on the same run
| Model | Picks | Long-short spread | Sides called correctly |
|---|---|---|---|
| GPT-5.6 Sol | XLC, TLT, XLK, XLRE, XLI, XLE | -0.98% | 33% |
| Claude Opus 5.5 | XLK, TLT, XLE, XLI, XLU, XLF | -0.68% | 33% |
| Gemini 1.5 Pro | GLD, TLT, XLE, XLU, XLF, XLRE | -0.77% | 67% |
| Muse Spark 1.1 | XLK, XLE, XLF, TLT, XLRE, XLP | -0.49% | 50% |
| Perplexity | XLE, GLD, XLK, XLU, TLT, IEF | -1.21% | 67% |
| Grok 4.5 | XLK, XLE, XLF, TLT, XLU, XLRE | -0.06% | 67% |
Written up on ForecastNest Insights: Macro Rotation: DeepSeek's picks for 2026-09-25.
ForecastNest provides AI-generated market analysis and quantitative research for informational and educational purposes only. Nothing here constitutes financial, investment, legal, or tax advice.