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Market Commentary and Trade Rationale
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 September 30th, 2026.
Markets spent the second half of September balancing renewed Federal Reserve tightening against an economy that continued to show surprising resilience. The Fed’s first rate increase since 2023 reinforced the message that inflation remains the central bank’s priority, while rising long-term Treasury yields tightened financial conditions further. At the same time, uncertainty surrounding the U.S.-Iran conflict and the Strait of Hormuz kept energy markets volatile. Stocks absorbed those crosscurrents better than bonds, but leadership remained concentrated as investors favored areas with durable earnings growth over more rate-sensitive parts of the market.
Technology remained the clearest source of support. Semiconductor and other growth-oriented shares helped major indexes remain resilient even as higher borrowing costs pressured the broader market. Bond yields remained a persistent headwind: the 10-year Treasury yield ended September at 5.29%, while the 30-year yield climbed to 5.64%. Oil added another layer of uncertainty, with Brent crude briefly moving above $107 a barrel as negotiations over the Strait of Hormuz stalled before retreating below $100.
Economic data complicated the Fed’s path. On September 16, policymakers unanimously raised the federal funds target range by 0.25 percentage points to 3.75%-4.00% and projected additional tightening. Yet the Personal Consumption Expenditures (PCE) price index came in below expectations at month-end, rising 0.3% in August and 3.4% from a year earlier1. Core PCE, which excludes food and energy, increased 0.2% for the month and 3.0% from a year earlier1. Current-dollar consumer spending rose 0.9%, while real spending increased 0.6%1. Second-quarter economic growth was revised sharply higher to a 2.2% annualized rate from the prior 1.5% estimate2. Labor data were mixed: job openings were little changed at 7.1 million in August3, while private employers added 90,000 jobs in September after a revised 36,000 in August4. Consumer confidence fell to 81.9 from 88.65.
Bottom line: September ended with resilient growth, softer-than-expected inflation data, and financial conditions that remain restrictive. The inflation report reduced some pressure for an immediate follow-up rate increase, but inflation remains above the Fed’s 2% target and energy prices remain vulnerable to geopolitical developments. Investors will turn next to the September jobs report on October 2, followed by September inflation data and the October 27-28 Fed meeting. Whether inflation continues to ease without a sharper deterioration in hiring will help determine whether the latest rate increase becomes part of a longer tightening cycle or a more limited adjustment.
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 September 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.
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.