Welcome to our September 2026 Viewpoints, a monthly bulletin from PDS Planning to our valued clients and friends. Our goal with each issue of Viewpoints is to provide you with a wide variety of perspectives on life and wealth. Feel free to share with others.
Treasury Yields Continue Increasing
US Treasury yields have been steadily climbing all year, with the past month’s increase becoming much steeper. The 10-year yield is 5.30% today, even higher than it was just two days ago, and the highest it has been since about 2002. The sudden increase stems from a firmer confirmation from the Federal Reserve that inflation is expected to stick around, as well as the recent Fed funds rate increase. Much of the current pressure on inflation comes from heightened energy costs, so it remains to be seen how that may shake out and, in turn, how yields respond.
Bond Yields near 15-Year Highs
As the yield curve above has risen, so too have fixed income yields across the spectrum. Each of the gray bars below represents the 15-year range in yields for the various sectors. The purple bar is the 15-year median, and the blue diamond represents current yields. In every one of the core fixed income sectors below, yields are at or near the top of their 15-year range. Based on current market conditions (inflation, the Fed funds rate, and the yield curve), we expect this to hold true for a little while longer. These high yields could present an interesting opportunity to invest in fixed income.
Average Forward Returns for Bonds (Again)
You’re probably getting some déjà vu looking at the chart below. I did use it just last month, so apologies for the repetition. The logic chain is worth repeating, though: US Treasury yields have risen significantly → core fixed income sector yields are at or near the top of their 15-year range → starting yield has been a solid predictor of forward returns in bonds.
Equity Asset Class Returns
It may surprise some investors to learn the highly touted large growth stocks have posted the lowest year-to-date return among US equity categories. It has certainly paid to be invested in large growth over the past decade, but years like this emphasize the importance of diversification in a portfolio.
Average Market Return During Midterm Election Years
Midterm elections are quickly approaching, with commercials, phone calls, and texts coming through non-stop. The chart below clearly shows how the S&P 500 tends to be much more volatile early in the year before climbing more sharply as the election nears and ultimately passes. There’s always uncertainty in the market, but election years add another layer that can create more ups and downs. Remember, the chart below shows only the average since 1931. The S&P 500 is up 12% this year, and we don’t know what these elections may bring. Ultimately, staying invested is the most important part.
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