The bond market was front and center in September, as Treasury yields rose sharply, and bond prices declined for both the month and the third quarter. The 10-year Treasury yield climbed to just shy of 5.3%, its largest monthly increase in four years. Persistent inflation, elevated oil prices, resilient economic growth and a more hawkish policy stance from the Federal Reserve (Fed) all contributed to upward pressure on yields. Supply also weighed on the market, as continued government borrowing coincided with significant debt issuance by large technology companies to fund AI infrastructure. At its September meeting, the Fed raised the Fed funds rate by a quarter of a percentage point, its first increase in more than three years. The European Central Bank also raised rates during the month, and global bonds declined over both the month and the quarter.
U.S. stocks declined in September amid higher interest rates but posted gains for the third quarter as the economy remained resilient. August job growth exceeded expectations, while the Fed’s preferred inflation gauge came in somewhat cooler than expected. However, concerns persisted as inflation remained above the Fed’s target, and energy prices stayed elevated. Technology and AI-related companies helped support returns, while more interest-rate-sensitive areas of the market came under pressure.
International stocks trailed U.S. stocks in September, as a stronger U.S. dollar weighed on returns for U.S.-based investors and rising global bond yields and higher energy prices added pressure on markets abroad. Despite the difficult month, international stocks edged up for the third quarter. Gains earlier in the quarter, led by emerging markets and AI-related demand, helped offset September’s declines.
A mix of economic, monetary, and geopolitical factors will shape markets as we approach the end of what has been an eventful year. Third-quarter earnings reports will show whether strong corporate profits can continue in a higher-rate environment. Fed policy will remain in focus, with incoming inflation and labor-market data likely to influence whether additional rate increases are ahead. The approaching midterm elections and ongoing geopolitical developments could also bring volatility to the markets. Maintaining a diversified approach remains important as markets navigate these developments and a range of potential outcomes.
Index Performance
September
Q3
Year-to-Date
Trailing 12 Months
U.S. Stocks (Russell 3000)
-0.84%
1.40%
12.42%
15.13%
International Stocks (FTSE AW ex U.S.)
-2.45%
0.48%
14.14%
19.98%
U.S. Bond Market (BBgBarc Int. Gov/Cred)
-1.66%
-1.88%
-1.49%
-0.31%
Cash (ICE BofA ML 3-Mo T-Bill)
0.27%
0.89%
2.37%
3.65%
Source: Morningstar, Inc. as of 9/30/2026.
Disclosure: Past performance does not guarantee or predict future results. There is no guarantee that any investment strategy, including those described here, will be successful. Any investment or investment strategy can lose money. Indexes are unmanaged and cannot be invested in directly. Diversification does not ensure a profit or protect against loss. You should not assume that any discussion or information contained in this market commentary serves as the receipt of, or as a substitute for, personalized investment advice from Raffa Investment Advisers (“Raffa”). This information was gathered from reliable sources, but we cannot guarantee accuracy or completeness. Indexes do not reflect the fees associated with actual investments and such fees would reduce the performance illustrated. Raffa may use artificial intelligence tools to assist in drafting content. All content is reviewed by Raffa personnel for accuracy prior to publication. Raffa’s policies governing AI use are outlined in its Compliance Manual.
September 2026 Market Commentary & Outlook
Market Commentary
The bond market was front and center in September, as Treasury yields rose sharply, and bond prices declined for both the month and the third quarter. The 10-year Treasury yield climbed to just shy of 5.3%, its largest monthly increase in four years. Persistent inflation, elevated oil prices, resilient economic growth and a more hawkish policy stance from the Federal Reserve (Fed) all contributed to upward pressure on yields. Supply also weighed on the market, as continued government borrowing coincided with significant debt issuance by large technology companies to fund AI infrastructure. At its September meeting, the Fed raised the Fed funds rate by a quarter of a percentage point, its first increase in more than three years. The European Central Bank also raised rates during the month, and global bonds declined over both the month and the quarter.
U.S. stocks declined in September amid higher interest rates but posted gains for the third quarter as the economy remained resilient. August job growth exceeded expectations, while the Fed’s preferred inflation gauge came in somewhat cooler than expected. However, concerns persisted as inflation remained above the Fed’s target, and energy prices stayed elevated. Technology and AI-related companies helped support returns, while more interest-rate-sensitive areas of the market came under pressure.
International stocks trailed U.S. stocks in September, as a stronger U.S. dollar weighed on returns for U.S.-based investors and rising global bond yields and higher energy prices added pressure on markets abroad. Despite the difficult month, international stocks edged up for the third quarter. Gains earlier in the quarter, led by emerging markets and AI-related demand, helped offset September’s declines.
A mix of economic, monetary, and geopolitical factors will shape markets as we approach the end of what has been an eventful year. Third-quarter earnings reports will show whether strong corporate profits can continue in a higher-rate environment. Fed policy will remain in focus, with incoming inflation and labor-market data likely to influence whether additional rate increases are ahead. The approaching midterm elections and ongoing geopolitical developments could also bring volatility to the markets. Maintaining a diversified approach remains important as markets navigate these developments and a range of potential outcomes.
U.S. Stocks (Russell 3000)
-0.84%
1.40%
12.42%
15.13%
International Stocks (FTSE AW ex U.S.)
-2.45%
0.48%
14.14%
19.98%
U.S. Bond Market (BBgBarc Int. Gov/Cred)
-1.66%
-1.88%
-1.49%
-0.31%
Cash (ICE BofA ML 3-Mo T-Bill)
0.27%
0.89%
2.37%
3.65%
Source: Morningstar, Inc. as of 9/30/2026.
Disclosure: Past performance does not guarantee or predict future results. There is no guarantee that any investment strategy, including those described here, will be successful. Any investment or investment strategy can lose money. Indexes are unmanaged and cannot be invested in directly. Diversification does not ensure a profit or protect against loss. You should not assume that any discussion or information contained in this market commentary serves as the receipt of, or as a substitute for, personalized investment advice from Raffa Investment Advisers (“Raffa”). This information was gathered from reliable sources, but we cannot guarantee accuracy or completeness. Indexes do not reflect the fees associated with actual investments and such fees would reduce the performance illustrated. Raffa may use artificial intelligence tools to assist in drafting content. All content is reviewed by Raffa personnel for accuracy prior to publication. Raffa’s policies governing AI use are outlined in its Compliance Manual.