A Positive Sign from the Bond Market

The U.S. Treasury auctioned $39 billion of new 10-year bonds and $22 billion of 30-year bonds. The auctions were among the strongest in years, suggesting that confidence and demand in the U.S. Treasury market remain strong.

Interest Rates Remain an Important Market Ingredient

The 10-year Treasury yield began the year at approximately 4.16% and now sits just under 5.00%. That is a significant increase in only 8½ months, and hopefully the bulk of that rise is now in the rear-view mirror. The move has also pushed the national average 30-year mortgage rate above 7%.

I typically suggest that two of the most important ingredients for the markets are corporate profits and interest rates. Stocks have absorbed the rise in rates very well so far this year. From here, stabilization in rates will be important—and could give investors one less obstacle to navigate as we move into the final months of 2026.

Oil Moves Back to Center-Stage

Along with the continuing issues surrounding the Strait of Hormuz, we learned last week of the forced shutdown of a major east-west Saudi pipeline and severe transit disruptions in the Bab el-Mandeb Strait, a critical checkpoint for oil leaving the Red Sea.

At this point, the war with Iran appears to have no clear end in sight. Members of the administration have suggested that the conflict—and the pressure on gas prices—could last well beyond the midterm elections. Other reports have suggested an even longer timeline. Only time will tell, but with oil now hovering around the $100-per-barrel mark, the near-term expectation that inflation will continue to ease is increasingly in question.

Inflation Was Close to Expectations— But Energy is the Wildcard

Last week, both the Consumer Price Index (CPI) and Producer Price Index (PPI) were reported close to expectations:

• Headline CPI: +0.4%
• Core CPI: +0.3%
• Headline PPI: +0.4%
• Core PPI: +0.2%

Prices were reported higher for used vehicles, airfare, hotels and communication services. Apple also announced its new phone lineup, with higher pricing across the iPhone 18 Pro models. Its new foldable device, the iPhone Duo, starts at $1,999. Did we ever believe mobile phones would become this expensive?

If oil prices remain in this higher range, I would expect the inflation numbers to move higher. Diesel—critically important to moving goods throughout the United States—has also moved sharply higher, adding pressure to the trucking industry and potentially to the cost of goods.

What Markets Need Next

With third-quarter earnings season still more than a month away, the markets may need another catalyst to move higher. The good news is that the unemployment rate remains historically favorable, and higher end discretionary spending has not abated.

AI Leaders Are Calling for a Slower Pace

One of the more striking stories over last week came from the people building the world’s most advanced AI systems. Anthropic CEO Dario Amodei called for the industry to deliberately slow the pace of frontier AI development, so safety measures have time to catch up. His concern is that AI is becoming more capable and autonomous faster than cybersecurity, oversight and safeguards are advancing.

Amodei’s most striking warning was that, if capabilities continue advancing at the current pace, coordinated groups of AI agents could begin causing enormous damage across the internet within the next 6 to 12 months. He is not calling for AI development to stop, but rather for independent safety evaluators, stronger regulatory standards, and greater international coordination.

What made the story particularly noteworthy was the response from his competitors. OpenAI CEO Sam Altman said he agrees that the industry needs to “pace the frontier” and said OpenAI would also provide independent evaluators greater access. Elon Musk publicly backed Amodei as well, writing simply, “Dario is right.” When leaders racing to build the most powerful AI systems are all saying we need to be careful, I believe it is worth paying attention.

This does not mean AI is going away or that we should assume a worst-case outcome. In many ways, the concern is the opposite: the technology may be advancing so quickly that our ability to control and secure it is struggling to keep pace. AI still has enormous potential, but major technological changes also bring risks and unintended consequences. For investors, it is another reason to remain diversified and disciplined rather than allowing any one theme to drive a retirement strategy.

Social Security Reform is Back in the Conversation

Congress has begun paying more attention to Social Security’s long-term financing problem. According to the 2026 Social Security Trustees Report, the Old-Age and Survivors Insurance Trust Fund (OASI)—the fund that pays retirement and survivor benefits—is projected to pay full scheduled benefits through the fourth quarter of 2032. If Congress took no action, ongoing payroll-tax revenue would still cover about 78% of scheduled OASI benefits at that point. Looking at the retirement and disability trust funds on a combined basis, reserves are projected to last until 2034.

That is an important distinction: Social Security is not projected to disappear or go to zero. The issue is that current financing is not sufficient to pay 100% of scheduled benefits indefinitely.

There is renewed bipartisan interest in creating a formal process or commission to address long-term solvency. That does not mean Congress has agreed on the solution. Among the ideas that have been debated for years are raising the amount of wages subject to Social Security tax, increasing the payroll tax rate, adjusting the benefit formula and potentially raising the full retirement age for younger workers.

I certainly agree that reform should happen sooner rather than later. The longer Congress waits, the more difficult the choices become and the less time there is to phase changes in gradually. With the midterm elections approaching, I expect continuing debate to attract voters, but I would be surprised if a major reform package were completed in the immediate future. Social Security has always been politically difficult, and we should expect plenty of proposals and headlines before there is a final agreement.

For current retirees and people close to retirement, I would not make major planning decisions based on speculation about proposals that have not become law. We will continue to monitor the debate closely and explain what any proposed or actual changes mean for your retirement plan.

The Week Ahead: The Federal Reserve Takes Center Stage

The biggest event this week will be the Federal Reserve interest-rate announcement on Wednesday. Market expectations have moved heavily toward a rate increase.

Fed Chair Warsh is in a challenging position. Raising rates can help address broader inflation pressures, but higher rates cannot directly lower the price of oil, which has been one of the main reasons inflation has remained sticky. On the other hand, if the Fed does not raise rates, critics will argue that policymakers are falling behind the curve.

I’ll be listening closely to what Chair Warsh says during the press conference after the rate announcement. His comments about inflation, oil and the future path of interest rates may be every bit as important as the rate decision itself.

Social Security Educational Workshops

We will be offering two Social Security Education Workshops designed for those approaching retirement or still deciding when to claim Social Security benefits.

The decision about when to claim Social Security can have a meaningful impact on your retirement income strategy. During the workshop, we will discuss:

• Social Security rules and claiming considerations
• Tax planning surrounding retirement income
• Retirement income planning
• Important issues to consider before filing for benefits.

To reserve your seat, please call Colette Kopp at (856) 354-3200 x 205.

Thank you for reading!

1. RICP® conferred by The American College ↩︎