--- title: Back at It author: Brandon Grundy, CFP® --- # Back at It 15 Sep, 2026 It’s good to be back after my summer blog break. I’ve otherwise been hard at work and there were at least a couple of times when I thought I’d have to break my break, so to speak, because there was so much going on. Along those lines, let’s review some of the developments over the past several weeks, talk about expectations and what, if anything, to do about them. The stock and bond markets encountered some headwinds in recent weeks. The main issues impacting both are interest rates, inflation and Fed policy, oil prices and the Iran war, on-again-off-again tariff policies, and perhaps ironically, concerns that the AI industry is considering slowing itself down. We can debate how to prioritize this list, but the reality is that each is important and they’re all swirling together. Never a dull moment! Interest rates – The bond market has been in a bit of a revolt since Kevin Warsh became Fed Chair in May. Depending on the index, bond prices have fallen around 1% to 3% since then. This isn’t all Warsh of course. The same indexes are down from 1% to 6% over the past year. Still, his style and approach are different from what markets are used to. One of the big issues has been Warsh’s reluctance to provide additional context around the Fed’s interest rate policies and there’s some grumbling about that. This changed rather abruptly a couple of weeks ago when Warsh delivered unexpectedly hawkish remarks at an economic symposium. Since then, markets have been pricing in a growing certainty that the Fed will raise its interest rate benchmark when it concludes its two-day meeting this Wednesday. Currently, markets are pricing a 92% probability of a quarter-point rate increase, up from around 55% before Warsh’s speech. Among other things, this caused the yield on the 10yr Treasury, a key benchmark, to quickly rise from around 4.6% several weeks ago to just above 5% as I type. While that percentage change might seem small, it’s a big move for bonds in a short time. Also, while 5% is just a number with no special significance by itself, it’s psychologically important since the 10yr yield hasn’t closed a market day at that level since late 2007, which is an ominous comparison.   Oil prices – The Iran War heated up again in recent weeks. That, plus related supply constraints, have caused crude oil prices to shoot higher. The main global benchmark for oil was over $100 per barrel in July but fell to less than $80 by early August. Then developments in the Middle East caused prices to rise quickly back to $107 currently. The US benchmark, West Texas Intermediate, also rose to $104 in recent days. High and volatile oil prices create a host of problems, but especially for drivers around the US. National gas prices are averaging $4.31 per gallon according to AAA, and CA is over $6. Diesel prices are $6.23 per gallon nationally and over $8 in CA, about 70% higher nationally than a year ago. You may not drive a diesel vehicle, but Corporate America and farmers live on it, so those extra costs have to be passed through at some point. Last week we learned from the Bureau of Labor Statistics that the Consumer Price Index rose 3.4% over the last 12 months. This was higher than anticipated, led by a 16% increase in energy and 2.7% for food prices. Removing those two categories, all other items averaged an increase of barely over 2%. Ironically, the Fed’s stated inflation target is 2% for “core” inflation that excludes food and energy prices. But everyone needs food and energy, so traditional inflation metrics seem less relevant right now. To make matters worse, there are reports of discussions within the White House of the Iran war potentially lasting beyond the Trump presidency. If that’s even close to accurate, how will persistently high oil prices bleed through to consumer spending, corporate profits, GDP growth, and so forth. That’s a serious set of questions that I don’t think anybody can answer at this point. Tariffs – There was a bit of a summertime lull in tariff announcements, but they came back with a bang in recent weeks as trade talks between the US and Canada broke down. The Trump Administration announced more and larger tariffs on certain Canadian products, which led to retaliatory/counter tariffs from Canada, which then led to more tariffs and outright bans on some products by both sides. Tariffs are taxes and they’re always paid by someone, although it’s impossible to control the details of who ultimately pays, and how and when. There have been reports in recent weeks suggesting that a meaningful percent of tariffs over the past year were absorbed by foreign producers. We’ve also seen recently how some larger publicly traded companies received large tariff refunds from the US government. Apparently, Walmart took in almost $11 billion, while Apple, Target and Costco each received around $2 billion, to name a few. So, maybe impacts are relatively benign for consumers when averaged out at the macro level, but I think many if not most individuals would disagree with that sentiment. A potential AI slowdown – AI-related news can be exciting or frightening depending on what you’re reading and your perspective. Or it can be both at the same time (“Boom and Doom”, as the WSJ put it), which is a dichotomy that’s hard to explain. Still, a big chunk of the stock market has been rising based on assumptions about how quickly this new industry will grow, so anything calling that into question creates volatility. In recent days it has been concerns among insiders that AI models could grow beyond creators’ ability to control them. Industry leaders are publicly wondering about slowing the pace of growth, even delaying assumed IPOs for OpenAI and Anthropic later this year. That’s contrary to the market narrative, so short-term downside risk is to be expected. Slower growth of AI is still fast compared to the rest of the economy, so probably not overly concerning from a market perspective. And this should be even less concerning for investors with portfolios that are broadly diversified across sectors and industries. You can call that short-sighted given the “Doom” part of the narrative, and it may be, but for better or worse markets (and the major industry players at the end of the day) are focused on the money. So, what to do about all this? The most direct issue for investors is Fed policy and interest rates, even with AI fears being in the news so much in recent days. This has hit bond prices, as I mentioned, but it hasn’t been too bad for shorter-term bonds, which is what I usually buy for clients. So, a positive to rising rates is that cash can be invested at higher yields, and that’s helpful when investing cash or when rebalancing from stocks to bonds if that’s part of your longer-term plan. More broadly, while the Fed and other central banks seem to be in rate hiking mode, much of that is priced into the market. Central banks raise interest rates to cool an overheated economy, but overshooting is always a risk. I mentioned the 2007 comparison above, however almost nobody is calling for a near-term recession. Still, borrowing costs are likely to continue rising for new mortgages and other forms of borrowing across the economy, and that’s bound to slow growth. If you’ve been waiting for rates to fall before borrowing, now may be a good time. Otherwise, if you need cash, perhaps we could take some gains from your investments to eliminate or reduce the amount you need to borrow at higher rates. I’m still optimistic about the economy and markets, but I think it’s best to proceed with an extra dose of caution right now. Have questions? Ask us. We can help. - [Investing & Markets](https://ridgeviewfp.com/index.php?option=com_tags&view=tag&id[0]=6:investing) ![](https://ridgeviewfp.com/media/yootheme/cache/c2/brandon_grundy-c28cb604.jpg) Brandon Grundy, CFP® Founder and Principal of Ridgeview Financial Planning ## Popular Articles [See all](https://ridgeviewfp.com/index.php?Itemid=117) ### [When Good News is Bad News](https://ridgeviewfp.com/index.php?option=com_content&view=article&id=57:when-good-news-is-bad-news&catid=8) 14 January 2025 Before beginning I have to take a moment to comment on the fires raging in SoCa… [Read more](https://ridgeviewfp.com/index.php?option=com_content&view=article&id=57:when-good-news-is-bad-news&catid=8) ### [Stashing Cash](https://ridgeviewfp.com/index.php?option=com_content&view=article&id=65:stashing-cash&catid=8) 22 October 2023 Over the past several weeks we covered a handful of year-end considerations wit… [Read more](https://ridgeviewfp.com/index.php?option=com_content&view=article&id=65:stashing-cash&catid=8) ### [Falling Consumer Sentiment](https://ridgeviewfp.com/index.php?option=com_content&view=article&id=51:falling-consumer-sentiment&catid=8) 25 February 2025 Good morning. 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