Quarterly Market Data - September 2026

Commodities surged; Equities struggled

Asset Class Returns

Major Asset Class Returns - 3 Months Ending September 30, 2026

• Commodities were the best performing asset class, aided by the price of oil, which rose 30% during the quarter. Geopolitical tensions in the Middle East propped up energy markets.

• U.S. Large Cap (+2.12%) was the only other asset class with a real gain. International Developed was technically positive (+0.01%) but essentially unchanged from Q2.

• U.S. Small Cap stocks led to the downside. The iShares Russell 2000 ETF declined by 7.51%. Real Estate also lost more than 7.0%. The rise in interest rates increased borrowing cost, limiting asset appreciation. (more below)

• Fixed Income returns were negative. Higher bond yields pushed down bond prices.

Major Asset Class Returns - 12 Months Ending September 30, 2026

• Seven of eight asset classes have a positive trailing twelve-month return.

• Commodities rebounded sharply after a steep second quarter decline. The broad commodities basket is heavily weighted towards energy and has largely followed the tenor regarding the ongoing conflict in the Middle East.

• Emerging Markets are the second-best performing asset class over the last year. The group returned 26.9% over the period. Emerging Markets benefitted from rising commodities (which favors developing nations), lower volatility amid global growth, and a general "risk-on" attitude over the past twelve months.

• U.S. Small Caps were the best performing domestic equity class during the past year. Smaller stocks have beaten large cap and mid cap stocks over the trailing twelve-month periods in each quarter this year, also indicating more openness to risk taking.

• Fixed Income turned negative. The upward pressure on yields pushed bond prices lower.

• Despite the drop during the quarter, Real Estate remains positive on a trailing twelve-month basis.

U.S. Index Returns with Growth & Value Styles

• The performance among styles and size stems from investor appetites moving from speculative growth to more sound fundamental judgement. Value beat growth across the capitalization spectrum. Large > Mid > Small.

• Large Cap was the only capitalization range with positive returns last quarter, where all styles posted gains.

• Small Cap Growth declined the most. The semiconductor and memory chip industries experienced large pullbacks due to the greater emphasis on steady, visible demand drivers, instead of current growth spikes.

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Interest Rates

• The interest rate curve made a decisive shift upwards compared to the end of June. The short-dated 1M maturity increased 0.32% to 4.02% and the long-dated 30YR increased 0.73% to finish the quarter with a 5.64% yield. The largest increase occurred at the 5YR maturity, which increased 0.90% to finish with a 5.09% yield.

• The curve structure has almost completely normalized. Increasing maturities have increasing yields, except for the 30YR, which is four basis point lower than the 20YR.

• The 2Y/10Y spread widened by eleven basis points from last quarter. The spread is now 0.41%. The wider spread is a result of the10YR yield rising more than the 2YR yield.

• The current spread is below the 0.56% gap experienced at the end of last September.

Disclaimer - this is not to be construed as investment advice or a recommendation to buy or sell any security. This is not meant to be indicative of any specific portfolio returns. Please see full disclosure on main blog page.