Tuesday 9/15/2026 p.m.

• Stocks trade lower with elevated yields in focus – U.S. equity markets closed lower on Tuesday, with elevated bond yields in focus as the 10-year U.S. Treasury yield finished around 5%, while the 30-year Treasury yield rose to 5.37%. The rise in yields has not been limited to the U.S., as longer-term Japanese government bond yields moved higher overnight and the benchmark 10-year yield reached a fresh 30-year high. From a leadership perspective, most S&P 500 sectors finished the day lower, with energy and materials the lone sectors to post gains. Looking across global equity markets, Asian markets were mostly lower overnight, while European markets followed suit with modest declines. The economic calendar was relatively quiet today, but activity picks up over the remainder of the week, headlined by tomorrow’s Federal Reserve interest-rate decision, where markets expect the Fed to raise interest rates by 0.25 percentage points. In commodity markets, oil prices continued to climb amid uncertainty in the Middle East, with WTI crude closing around $106 per barrel.
   
• All eyes on the Fed – Monetary policy is in focus this week as investors await the Federal Reserve’s interest-rate decision tomorrow afternoon. With underlying inflation still running above levels consistent with the Fed’s target and uncertainty in the Middle East pushing WTI crude oil back above $100 per barrel, the near-term inflation outlook has become more uncertain. Markets currently assign a 92% probability to a 0.25 percentage-point rate increase at tomorrow’s meeting, which we'd view as the most likely outcome. However, unlike the tightening cycle that began in March 2022 and ultimately lifted the upper bound of the federal funds target range from 0.25% to 5.5%, we expect any renewed tightening cycle to be comparatively short-lived. The inflation backdrop is considerably more favorable today, in our view, than it was at the beginning of the previous cycle. Core CPI was rising 6.5% annually in March 2022, compared with 2.4% in August 2026. Labor-market conditions also appear substantially more balanced. Job openings modestly exceeded the number of unemployed workers in July, compared with roughly two openings for every unemployed worker at the peak in March 2022. The earlier imbalance between labor supply and demand likely contributed to elevated wage growth and broader inflationary pressures, in our view. Today, by contrast, a more balanced labor market and slower nominal wage growth suggest that labor demand is no longer providing the same degree of inflationary pressure. Although core inflation remains uncomfortably high and renewed energy-price pressures could slow further progress, inflation has moderated considerably from its 2022 peak. Against this backdrop, we expect any renewed Fed tightening to be limited in scope and duration. Importantly, we do not expect a modest additional increase in interest rates to derail the broader economic expansion or the equity bull market.
   
• Bond yields reach highest level since 2007 – The upward trend in bond yields continued Tuesday, with the 10-year U.S. Treasury yield trading near 5%. In our view, elevated inflation, resilient economic growth, persistent concerns about federal deficits, expectations for tighter global monetary policy, and heavy Treasury and corporate issuance have all contributed to the recent increase in yields. As discussed in our Monthly Fixed-Income Focus, income is an important component of fixed-income returns, particularly over multiyear periods. Accordingly, today’s higher starting yields could improve the return outlook for investment-grade bonds over the coming years, helping reinforce their role as a strategic allocation within well-diversified portfolios. In the near term, however, we expect persistent inflation concerns, elevated issuance and uncertainty surrounding the path of monetary policy to keep yields elevated, limiting the potential for meaningful bond-price appreciation. Against this backdrop, we believe the opportunities and risks are relatively balanced across shorter- and longer-maturity U.S. investment-grade bonds. We therefore recommend maintaining neutral duration exposure relative to the U.S. investment-grade benchmark.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data: FactSet.}