Market Insights Recap — Week of September 28, 2026

Hello, I'm Steve Orr, Chief Investment Officer for Texas Capital's Private Bank.

Well, some weeks it looks like just one or two things or nothing happens at all. Well, in markets, there's always something happening, just maybe kind of under the surface. Last week, the iceberg you could see was treasury rates jumping higher by a 10th of a percent or more. Well, that's a big jump for us bond managers. U.S. Treasury interest rates have been coiling like a spring for the last two years, getting ready to break out. And when stocks or bond prices break out, there's never just one driver despite what the hairspray says on TV.

Current drivers are real rates rising on real economic growth. Not bad, but also rising on fears of rising deficits and debt levels. Diesel shortages pushing inflation near-term, strong economy pushing credit demand and other central banks raising rates to combat their inflation. 

Now, the Fed, of course, has a hand in this too. We think they hike again in December and once more in the spring. The global diesel shortage should be getting the Fed's attention. It's responsible for a good portion of the headline inflation's move towards 4% in the coming months. Now this week, the Fed's favorite inflation measure, personal consumption expenditures, is going to sit steady at 3.7% month over month. Now remember, that survey period looks at prices a month ago, before gas and diesel prices began their latest rise. Next month inflation readings, they're going to show the effects of those price increases.

A third quarter growth, though, it should net out over 3% this quarter. The headline surveys, they're near 5%. But you have to back out inventory build and imports. Three percent real growth plus 3% inflation equals a 6% nominal growth for our economy. An excellent result. Stocks do not like rising oil prices and interest rates. We think a lot of traders are looking at the interest rate increases as a result of real growth, and we agree.

Earnings season starts in two weeks. Expect another double digit increase in earnings per share for the S&P 500. Historically, October begins the best three months of the year for stock returns. That'd be a treat after a number of tricks over the last few years, like tariffs and virus shutdowns and wars, etc. So stay patient with our stock positions. Low bond exposure, moderate commodity exposure and cash is still continuing to do well; 'til next time.