October 2026 Impelytics

• The US stock market delivered a highly fragmented performance in September 2026, exposing a sharp divide between tech-heavy mega-caps and the broader market. Driven by a combination of a global bond selloff, the Federal Reserve hiking rates, and intensifying geopolitical tensions in the Middle East, most major indices slid, while the tech-dominated Nasdaq bucked the seasonal downtrend.

• The US bond market suffered a sharp selloff in September 2026, widely described as a "bond market rout". This was driven by a historic shift in monetary policy when the Federal Reserve voted unanimously to raise the benchmark federal funds rate by 25 basis points—reflected by the US Aggregate Bond Index dropping 2.61% over the course of the month.

• September 2026 economic data pointed to a resilient, expanding economy paired with escalating price pressures. While weekly unemployment claims remained near historic lows, a highly anticipated third estimate of Q2 GDP showed stronger-than-expected growth.

• Volatility in various segments of the markets has picked up recently, as is typical as we approach the midterm elections. It is important to remember that history shows that the 12 months following midterm elections have historically shown positive returns since 1950.

• Despite headlines that may try to divert your attention towards political and economic uncertainty, it is important to let your financial plan drive your portfolio decisions. Despite the news and noise of the cable news networks and social media outlets, it is best not to let them divert you from your long-term investment goals and strategies.

The US bond market suffered a sharp selloff in September 2026, widely described as a "bond market rout."  This was driven by a historic shift in monetary policy when the Federal Reserve, led by Chair Kevin Warsh, voted unanimously to raise the benchmark federal funds rate by 25 basis points to a target range of 3.75% to 4.00%. This marked the central bank's first rate increase in over three years, enacted to combat persistent 3.4% headline inflation, surging energy prices linked to the conflict in the Middle East, and massive debt-funded spending on artificial intelligence infrastructure. These combined pressures resulted in the US Aggregate Bond Index dropping 2.61% over the course of the month, as bond prices move inversely to interest rates.

September 2026 economic data pointed to a resilient, expanding economy paired with escalating price pressures. Weekly unemployment claims remained near historic lows, below 200,000 per week, a Level not consistently seen since the late 1960s, when the workforce in the United states was substantially smaller. The highly anticipated third estimate of Q2 GDP showed stronger-than-expected growth. It was revised upward from 1.5% to 2.2%. Meanwhile, both the manufacturing and services sectors maintained solid expansions. However, sub-indices revealed a notable surge in input prices driven by global supply chain strains and the ongoing conflict in Iran. Corporate profits have also exceeded expectations so far this year and are expected to continue this trend as we approach third-quarter earnings season in the next couple of weeks.

As most people know, the party in power tends to lose ground in the midterm. Leading up to the election, that uncertainty can stir market volatility. But once the results are decided, markets tend to rally. In fact, the average return in the year after a midterm election year is 15.1%, which is roughly double all other years.

History shows that the 12 months following midterm elections have historically been very good for investors. As you will see in our final chart below from our friends at Capital Group, once the uncertainty surrounding the midterm election abates, the market, as measured by the S&P 500 index, has produced positive one-year returns in every period following the election since 1950. As always, past returns don't predict or guarantee future results.

Sources: Capital Group, RIMES, S&P Global. Calculations use Election Day as the starting date in all election years, and November 5 as a proxy for the starting date in other years. Only midterm election years are shown in the chart, as of December 31, 2025.

Headlines will likely try to divert your attention towards political and economic uncertainty. Despite the news and noise of the cable news networks and social media outlets, do your best not to let them divert you from your long-term investment goals and strategies. It is important to let your financial plan drive your portfolio decisions. If your goals and plans have not changed, your investment portfolio probably should not either.

Please remember the team at Impel Wealth Management is here to help you if you have questions or concerns about your unique financial situation. The midterm election cycle will eventually pass, and the media will move on to the next crisis du jour. Thank you for your continued trust and confidence in our team and our process.

The views stated in this letter are not necessarily the opinion of Cetera Advisors LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.

The Bloomberg U.S. Agg Total Return Value Unhedged, also known as "Bloomberg U.S. Aggregate Bond Index," formerly known as the "Barclays Capital U.S. Aggregate Bond Index," and prior to that, the “Lehman Aggregate Bond Index,” is a broad-based flagship benchmark that measure the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate pass-throughs), ABS and CMBS (agency and non-agency).

Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.

A diversified portfolio does not assure a profit or protect against loss in a declining market.

Jesse Hurst, CFP, AIF- Senior Wealth Manager - Chair

Nathan Ollish, CFP, AIF - Senior Financial Advisor

Irene Zurowski, CFP, CRPS- Associate Wealth Advisor

Jared DeLiberato- Wealth Operations Associate