Macro & Market Musings | 9/25/26

Comments based on information available as of 5:15 a.m. CT on September 25, 2026.

Growth: A Growing Gap

Global growth is holding up, but not everyone is holding up the same. The Organization for Economic Cooperation and Development (OECD) just nudged its 2026 world forecast up to 2.9%. Technology-adjacent economies are pulling ahead while rate-sensitive and energy-importing ones are falling behind. What is true for countries is also true for households. Those who have enjoyed stock market gains are doing fine, but those who live closer to paycheck-to-paycheck are more exposed to high energy prices and higher interest rates. The gap doesn’t look to be closing anytime soon, for countries or for consumers.

Inflation: Stop the Spread

Philadelphia Fed President Paulson (a voter) offered the most honest inflation assessment of the week: the best you can say is that it hasn’t gotten worse. CPI held at 3.4% in August, unchanged from July. But the more important development isn’t with inflation as measured by this broad basket of goods and services; it’s with the individual products. It’s more about the microeconomics than the macroeconomics. Some companies are reverting to price hikes after price cuts or holding the line didn’t lift volumes as they hoped. That’s exactly the dynamic Cleveland’s Hammack (a voter) warned about, where repeated supply shocks entrench an inflationary mindset. The shock hits specific items, but psychology and behavior are how it spreads. The Fed can’t do much about the shock, but it can try to stop the spread.

Policy: The Other Side of the Coin

This past week, a parade of Fed officials all signaled more tightening is likely warranted. Investors did the math and now assign better-than-even odds of two more hikes by year-end. The bond market isn’t waiting for confirmation. Repricing the path ahead for the Fed combined with massive debt issuance by the government and corporations pushed the 30-year Treasury yield to its highest since 2004. Higher yields punish borrowers, but the other side of that coin is the most generous income savers have been offered in a generation.

Looking Ahead: Opposites Attract

The S&P 500 Consumer Discretionary index is down more than 4% year-to-date. The S&P 500 Energy index is up more than 40% year-to-date. The S&P 500 itself is up more than 12%. Own the good and the bad together and you still end up with a solid year. That’s how diversification works. Energy was the market’s worst sector not long ago; discretionary was a darling. Leadership rotates, and nobody rings a bell first. It’s an argument for staying diversified instead of chasing the past winners. It doesn’t pay to look at every line on a performance statement if it makes you lose sight of the overall portfolio picture.

This material is provided for informational and educational purposes only and should not be construed as personalized investment, legal, or tax advice. Information presented is general in nature and may not be appropriate for all investors. Investment recommendations, if any, are not intended for any specific individual or situation and should not be relied upon as the sole basis for making an investment decision. All investments involve risk, including the possible loss of principal. Past performance is no guarantee of future results.