We may be just entering autumn, but before we know it, the holiday season and 2027 will be upon us. While there’s still plenty of time left in the year, now is a good opportunity to start thinking about year-end financial decisions, whether that means charitable giving, IRA distributions, tax planning or simply reviewing your overall financial picture. December tends to be a busy time for financial institutions and advisors alike, so getting an early start can help ensure everything is in place before year-end deadlines arrive. If you’re looking for guidance as the year comes to a close, the Boulay Wealth team is here to help you navigate your wealth planning strategy.
The Economy: Resilience Meets Persistent Inflation
The steady labor market supported the U.S. economy in the third quarter as it demonstrated continued resilience despite rising inflation. The Consumer Price Index rose to 3.4% in August in large part due to a spike in energy prices. The September unemployment rate, though, came in at 4.2% and remained in the 4.1% -4.3% range seen since March. Higher prices and developments in the bond market led the Federal Reserve to hike its Federal Funds interest rate a quarter of a percent in September, the Fed’s first interest rate increase since 2023.
The Bond Market: Sell-Off Leads to Yields Surge
The bond market took center stage in the third quarter as bond investors grew increasingly concerned that higher prices and increased borrowing by the government and AI companies would push interest rates higher. That led to a bond market selloff, which resulted in a surge in bond yields and weak returns:
- U.S. Treasury Bond Yields: The 10-Year Treasury bond ended September at 5.3%, up from 4.3% six months prior. The 30-Year Treasury bond ended September at 5.6%, a level not seen since June 2004.
- Short vs Long Returns: The return of the Morningstar U.S. Core Bond Index declined 3.44% for the quarter, with longer-term bonds (10+ Years) declining 7.83%. Shorter-term bonds (1-5 Years) fared better, declining 0.9%.
The bond market’s newfound concerns have been the Boulay portfolio team’s view for quite a while. We continue to allocate primarily to short-term bonds to protect client portfolios from significant bond drawdowns.
Stock Market: AI Stocks Cool
Concerns about AI safety and opposition to massive data centers led investors to reassess AI’s growth potential in the third quarter. That paused the AI tech engine that has powered the U.S. stock market for three years. This resulted in a small gain for the U.S. stock market overall, and international stocks were impacted similarly. Despite the AI speed bump, corporate profits are on track to significantly outpace 2025 levels.
Key 3rd Quarter 2026 Stock Market Metrics (Morningstar Indices)
- U.S. Stock Market: The U.S. Total Market Index gained +1.36% (+12.58% YTD).• Growth vs. Value: The defensive U.S. Value Index managed a gain (+2.04%) while the tech-heavy U.S. Growth Index declined (-4.24%).
- International Markets: The Developed Markets ex-U.S. Index gained +1.38% (+10.39% YTD). After a large rally last quarter, the Emerging Markets Index edged down -0.77% (+22.46% YTD).
Commodities Rally
Boulay’s commodity allocations were a bright spot last quarter as the conflicts in Ukraine and Iran, as well as the El Niño weather pattern, pushed not only oil but many agricultural commodity prices up significantly. Gold had a strong rally in August but then retreated to finish up 3.7%.
It’s a good idea to be proactive with year-end tax and charitable giving planning to avoid the December rush. If you have questions about getting the process underway or would like help evaluating your options, connect with the Boulay Wealth team to start the conversation.
The Consumer Price Index measures changes in the cost of living by tracking prices for a basket of consumer goods and services.
The Morningstar U.S. Core Bond Index represents the performance of a portfolio consisting of U.S. Treasury, mortgage-backed, and corporate bonds with an approximate five-year maturity. The Morningstar 1-3 Year Core Bond Index measures the performance of fixed-rate, investment-grade bonds with maturities between one and three years. The Morningstar U.S. Market Index measures the performance of company stocks comprising 97% of the tradable universe of U.S. stocks. The Morningstar U.S. Growth Index measures the performance of U.S. stocks with characteristics that meet Morningstar’s growth criteria. The Morningstar U.S. Value Index measures the performance of U.S. stocks with characteristics that meet Morningstar’s value criteria. The Morningstar Global Markets ex-U.S. Index measures 97% of stocks in developed and emerging markets outside the U.S. The Morningstar Emerging Markets Index measures 97% of stocks in countries defined as emerging markets.
The opinions expressed in this article are those of the author and should not be construed as specific investment advice. All information is believed to be from reliable sources; however, no representation is made as to its completeness or accuracy. All economic and performance information is historical and is not indicative of future results. Diversification does not guarantee investment returns and does not eliminate the risk of loss. Indices are unmanaged and do not incur fees; one cannot invest directly in an index.