September 2026

At BlueStem Wealth Partners it is important to us that you are well informed about how we are managing your portfolio. The written commentary below is for the time period ending August 31st, 2026.

The bond market, more than the stock market, set the tone as August drew to a close. A summer selloff in long-dated government debt intensified in mid-August, pushing the 30-year Treasury yield to its highest level since 2007 while borrowing costs across Germany, France, Japan and the United Kingdom climbed to or near multi-year highs. Persistent fiscal deficits, above-target inflation, renewed oil pressure and heavy debt issuance all contributed to concerns about demand for long-duration bonds. The Treasury Department responded by unexpectedly doubling planned buybacks of longer-dated securities, briefly calming yields, while Federal Reserve Chair Kevin Warsh used his first Jackson Hole address as chair to reinforce that inflation remains the Fed’s primary concern and that another rate hike is firmly in play. Equities absorbed those pressures relatively well, although leadership beneath the surface shifted.

Rate-sensitive areas felt much of the pressure. Utilities and real estate lagged as higher yields reduced the appeal of dividend-paying shares, while small caps lost momentum late in the month as borrowing-cost concerns returned. Technology recovered from midmonth weakness after strong semiconductor earnings reinforced the durability of AI spending, helping the sector finish August as one of the market’s stronger performers. Retail earnings offered a more cautious view of the consumer. Walmart reported sales growth but warned that gasoline above $4 a gallon was forcing shoppers to make trade-offs, echoing broader signs that households are prioritizing essentials and value. Gold surged above $4,600 an ounce to a more than three-month high before falling sharply as yields rebounded, the dollar strengthened, and expectations for another Fed rate hike increased.

The economic data did little to settle the policy debate. The Personal Consumption Expenditures (PCE) price index rose 0.2% in July and 3.7% from a year earlier, slightly above forecasts, while core PCE, which excludes food and energy, matched expectations at 3.3%¹. The second estimate of second-quarter gross domestic product held at a 1.5% annualized pace, down from 2.1% in the first quarter, although consumer spending was revised higher².

Meanwhile, the Conference Board’s Consumer Confidence Index slipped to 89.4 from 90.2 as expectations for the next six months deteriorated³. Warsh called the inflation picture concerning and deliberately avoided offering forward guidance at Jackson Hole, leaving traders at month-end pricing roughly a two-thirds chance of a quarter-point rate increase at the Fed’s September meeting.

Bottom line: August ended with equities higher but the backdrop less comfortable than the headline return suggests. The S&P 500 gained about 2.6% for the month even though it finished roughly 1.4% below its August 13 record close, while renewed U.S.-Iran hostilities pushed oil back above $90 a barrel and added another source of inflation pressure. The August employment report on September 4 and Consumer Price Index on September 11 now carry added weight ahead of the Fed’s September 15-16 meeting. A weaker labor market would argue for patience, while persistent inflation and elevated energy prices strengthen the case for another hike. Equities have so far absorbed that tension, but September will test how long that resilience can continue if growth and inflation keep pulling policy in opposite directions.

Recent Trade Rationale: If you would like to see a high-level recap of recent changes to the model portfolios, please click on the link to read the August 2026 Trade Rationale. As a reminder, we utilize quantitative techniques to manage the models. Level Elements are designed to manage your model’s equity and fixed income exposure over time. This changes as fundamental, quantitative, and economic data changes. Style Elements are designed to manage what is in those equity and fixed income exposures

1. Bureau of Economic Analysis, https://www.bea.gov/news/2026/personal-income-and-outlays-july-2026
2. Bureau of Economic Analysis, https://www.bea.gov/news/2026/gdp-second-estimate-and-corporate-profits-2nd-quarter-2026
3. The Conference Board, https://www.conference-board.org/topics/consumer-confidence/

All opinions expressed in this commentary are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable; however, BlueStem Wealth Partners cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. To determine which investments or planning strategies may be appropriate for you, consult your financial advisor or other industry professional prior to investing or implementing a planning strategy. This commentary is not intended to provide investment, tax or legal advice, and nothing contained in these materials should be taken as such. Investment Advisory services are offered through BlueStem Wealth Partners are only offered where BlueStem Wealth Partners and its representatives are properly licensed or exempt from licensure. No advice may be rendered unless a client agreement is in place. The material provided is for informational purposes only and is not meant to be a solicitation or recommendation to buy/sell any security. BlueStem Wealth Partners is an investment advisory firm registered with the Securities and Exchange Commission (“SEC”). SEC registration does not imply a certain level of skill and or expertise.