BOND YIELDS BREAK HIGHER
Investors beat up on the bond market during the third quarter of 2026, as the yield on the 10-year U.S. Treasury note climbed from 4.44% on June 30 to 5.29% at the close of trading on Sept. 30. That is a pretty big move in a relatively short period of time. (1)
DRONES CHANGE THE BATTLEFIELD
Unless Washington has missed the message from the ongoing wars in Ukraine and the Middle East, playing defense on the battlefield seems to have changed dramatically. This could have negative ramifications for the Pentagon’s heretofore extremely expensive, high-tech wizardry. Relatively low-cost drones seem to do a lot of damage as well. (2)
THE FED RAISES RATES
The Federal Reserve raised the target range for the federal funds rate by 0.25% (25 basis points) at the Sept. 16, 2026, meeting. (3) This was as inflation remained elevated and the Fed continued to pursue its 2% inflation goal. Interestingly, CME FedWatch shows just how much market expectations for Federal Reserve policy can change over time. (4) It seems predicting that the Fed can be a thankless task.
NOT YOUR TEXTBOOK STOCK MARKET
September 2026 was a weird month for investors. As of Sept. 21, the Fed had increased the overnight rate at the previous week’s FOMC meeting. The 10-Year Treasury Note had increased about 0.20 percentage point since the start of the month. Crude oil had climbed about $10 per barrel over that same time. In essence, we had higher interest rates and energy prices. However, the S&P 500 was up a little over 75 points since the end of August. That isn’t exactly how they drew it up in business school in the early 1990s.
AI LEADERS HIT PAUSE
In September, tech industry leaders like Anthropic CEO Dario Amodei, OpenAI CEO Sam Altman and xAI CEO Elon Musk expressed support for slowing the pace of AI development. (5) Whatever their reasoning, it was curious enough to concern some investors. Why would leaders in the AI race, whose vast fortunes are closely associated with further growth, want to slow things down? Were they being worrywarts or canaries in the coal mine? Time will tell.
With the rate hike in September, the new chair of the Federal Reserve, Kevin Warsh, appeared to answer a question some had. Would Warsh be a diligent central banker or a chair heavily influenced by the administration that appointed him? (6) At the end of the quarter, the answer seemed to be the former.
FOOTBALL BEATS THE HEAT
On September 5, 2026, the high temperature in Tuscaloosa, Alabama, was 99 degrees. (7) Regardless, there was an announced attendance of 100,077 for the game against East Carolina at Bryant-Denny Stadium. No doubt many fans’ faces were as red as the Crimson Tide’s jerseys. Hey, who says we don’t have our priorities straight in this state?
JOB GROWTH LOSES STEAM
According to the Bureau of Labor Statistics (BLS), through August, the U.S. economy had created 643,000 net new payroll jobs in 2026. Obviously, that is around 80,000 per month, which is neither really good nor really bad. However, would it be enough to keep the U.S. economy growing at a healthy level? That was the question. (8)
INFLATION REMAINS STUBBORN
On September 11, 2026, the BLS announced the Consumer Price Index (CPI) had increased 0.4% during the previous month and 3.4% over the last 12 months. (9) Much of this was due to a sharp increase in energy prices, with energy prices contributing materially to the monthly increase. Regardless, consumers experience inflation differently than official aggregate measures might suggest, and inflation concerns remained elevated during the quarter. At least that is what The Conference Board reported on August 25, 2026. (10)
DATA CENTERS, CENTER STAGE
It seemed “everyone” was talking about artificial intelligence and data centers during the third quarter. So much so, I would be willing to bet that IF I had a dollar for each mention of the two in the U.S. media during the quarter, I would probably be able to build my own data center.
CHIPS VS. CARS
On September 22, 2026, according to Bloomberg, Nvidia’s (NVDA) market capitalization (shares outstanding times market price) was roughly 100 times that of Ford Motor Co. Again, 100 times. While I might understand why that is, it still seems a little weird to me.
DJOKOVIC: THE FINAL SET?
During the third quarter, tennis legend Novak Djokovic made it to the semifinals of Wimbledon and lost in the first round at the U.S. Open. As great as he has been, it has been three years since the 39-year-old won his last Grand Slam tournament. Sadly, it might be time for the Joker to call it quits.
INDIAN SUMMER
According to various sources, the summer of 2026 was the hottest ever recorded in the contiguous United States. The average temperature between June and August was 74.4 degrees Fahrenheit, 3.0 degrees above the 20-th century average. It was a roaster. (11)
Sources:
- Federal Reserve Bank of St. Louis, FRED – Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis.
- ABC News – What to Know About Iran’s Low-Cost, Long-Range Shahed Drones Wreaking Havoc in the Middle East. March 13, 2026.
- Board of Governors of the Federal Reserve System – Press Release. September 16, 2026.
- CME Group – FedWatch. Accessed September 16, 2026.
- The Associated Press – Slowing down AI: What would that look like and how possible is it? 21, 2026.
- Office of U.S. Sen. Jack Reed – Reed Grills Fed Nominee Kevin Warsh Over Whether He’ll Cave to Trump’s Demands to Lower Interest Rates. April 21, 2026.
- AccuWeather – Tuscaloosa, Alabama. Accessed September 16, 2026.
- U.S. Bureau of Labor Statistics – Summary Table B. Establishment Data, Seasonally Adjusted. August 2026.
- U.S. Bureau of Labor Statistics – Consumer Price Index Summary. September 11, 2026.
- The Conference Board – US Consumer Confidence. Accessed August 25, 2026.
- USA Today – Hottest Summer Ever? US Breaks Longstanding Record. September 10, 2026.
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