Last quarter's broad-based rebound met a reality check. Our Investment Committee Review and Outlook for Q4 2026 covers a quarter in which rising real yields and renewed geopolitical tensions narrowed market leadership back toward mega-caps, sent fixed income to its worst quarter in three years, and pushed Treasury yields above 5.25%. Commodities surged on the other side of the same trade, with energy up over 16%. Beneath a calm index surface, the number of stocks outperforming the S&P 500 Index dropped to near a two-decade low.
The paradox is that the stress created better opportunities. Higher starting yields have materially improved the forward math for bonds. Earnings estimates continued to climb, growth proved more resilient than expected, and property fundamentals strengthened even as real estate investment trusts (REITs) repriced. But concentration risk deepened—artificial intelligence (AI) accounted for 86% of venture capital dollars, major labs are financing their buildout through record debt issuance, and historically low correlations could reverse abruptly.
The big takeaway is selectivity over momentum. We are upgrading fixed income to modestly attractive, quality and low-volatility equities offer their cheapest entry points since 2008, and an energy overweight may continue to earn its keep as a geopolitical hedge. Stay diversified, extend duration selectively into quality, and respect the gap between what the index is saying and what the market beneath it is doing.
For a deeper dive, we invite you to read the full Investment Committee Review – Outlook Q4 2026.
Important Disclosures & Definitions
S&P 500 Index: widely regarded as the best single gauge of large-cap US equities. The index includes 500 leading companies and covers approximately 80% of available market capitalization. One may not invest directly in an index
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