An especially bad week across asset returns wraps up a bad trailing month.
- The week rang up a positive score of 5-27 across the benchmarks and ETFs we track, wrapping up a trailing 1-month time horizon of 6-26, with all 7 bond ETFs in the red for the month.
- An ugly turn in oil prices and downstream refined products can hurt inflation expectations and hit household discretionary cash flow. That will weigh on consumers in the 2026 home stretch. The adverse shifts in the yield curve are battering markets directly and indirectly, with mortgage rates edging above 7.1% per the Mortgage News Daily survey (see UST Curve: A Brutal Week 9-12-26).
- The Canada trade war is in its early stages, with ample room to escalate in the fall as Canada makes more decisions and Trump continues the retribution game plan. Tariff impacts only appear with a lag relative to working capital cycles and rolling effective dates.
- The coming week brings the FOMC decision on a hike, with FedWatch currently showing odds over 86% for a hike.
The chart above updates the time-horizon returns for the debt and equity benchmarks we monitor. It has clearly been a rough month for debt, with all returns negative, and 3 of 4 months are in the red. YTD, we see 2 benchmarks in the red.
In equities, we see an all-negative month, but the Russell 2000 has been feeling some pain for over 3 months. The Russell 3000 Growth has lagged over 3 months and has been the worst of that column YTD, with the rest in double digits.
The tech bellwether checklist and benchmark comps show 9 in the red and 7 posting positive returns for the week. The Mag 7 shows 4 positives and 3 negatives. Looking back 3 months, we see the Software ETF (IGV) well ahead of the Semiconductor ETF (SOXX). That reverses dramatically YTD with SOXX at +75.2% vs. -3.93% IGV. For YTD returns, Oracle (ORCL) has been the worst of the pack followed by Tesla.
We already posted a commentary on the weekly returns for the benchmarks and ETFs (see Weekly Returns: Benchmarks and ETFs 9-12-26). The 5-27 score includes 3 energy names (XOP, XLE, AMLP) in the positive range, in contrast to many other line items.
We already looked at the weekly tech check returns (see Weekly Tech Check Returns 9-12-26). The main takeaway is that the AI ecosystem and semiconductor names had a good week, with software still dragging on the right.
The 1-month returns for the broader mix of benchmarks and ETFs were almost as glum as the past week, with a score of 6-26. We see energy-related names in the top 3 slots. The Communications Services ETF (XLC), Tech ETF (XLK), and EM ETF (VWO) squeezed out some unimpressive but positive 1-month returns.
We see some of the more interest-rate-sensitive ETFs weaken. That includes Homebuilders (XHB), which is really feeling the adverse move in the 10Y UST that flows into mortgages. Seeing Industrials (XLI), Transports (XTN), and Materials (XLB) can be traced to some jitters around fallout in downstream refined products, and in the case of XLB, on the feedstock and tariff side.
The 1-month tech check shows a more varied mix than what we have been seeing with blurred lines of outperformance in the top quartile across semiconductors and software. We see Dell (DELL) and Salesforce (CRM) well ahead of the pack at #1 and #2. We see Micron (MU) and Qualcomm (QCOM) in the top 5, with Applied Materials (AMAT) and Broadcom (AVGO) on the bottom, and NVIDIA sitting in the middle of the pack.
The 3-month score at 15-17 showed better balance, with 6 of 7 bond ETFs in the red, the Short UST 1-3Y ETF (SHY) barely positive at +0.01%. We see aviation fuel and diesel pain hitting Transport (XTN), with the most curve-exposed assets at the bottom: Homebuilders (XHB), the long-duration UST 20+Y ETF (TLT), and the IG Corporate ETF (LQD).
Among the winners, the energy names (XOP, XLE, AMLP) were 3 of the top 4 slots, with E&P (XOP) the runaway winner. One of the top-quartile names that might get some attention was the BDC ETF (BIZD) after an earnings season that was not as bad as many had feared.
Among the notable results, only 1 broad market index (S&P 500) was in the top quartile, with the NASDAQ in the 2nd quartile and the Russell 2000 and Midcaps in the 3rd quartile.
The YTD story on the broader mix still shows a very strong year for equities and a bad year for debt, with 4 of 7 bond ETFs in the red zone and only one bond ETF over +1% (HYG at +1.45%). That is not pretty. The overall score was a solid 24-8.
Energy names (XOP, XLE, AMLP) took 3 of the top 4 spots, with the Tech ETF (XLK) grabbing #3. Russell 2000 took #5. Regional Banks (KRE), NASDAQ, and Materials (XLB) round out the top quartile.
Of the bottom-quartile assets in the red, we see 4 bond ETFs, with Consumer Discretionary (XLY) at the bottom, Homebuilders (XHB) 3 off the bottom, and Communications Services (XLC) just ahead of it. The BDC ETF (BIZD) posted -2.48% after a decent rolling 3-month period.
It is hard to shift the patterns of the tech return distributions after such amazing numbers were generated by the semis and AI ecosystem names. It took +75.0% to rank #6 with the Semiconductor ETF (SOXX). It took +42.6% to reach the top quartile, with Taiwan Semiconductor Manufacturing (TSM). The bottom tier comprises 6 of the 8 software names, joined by Tesla (TSLA) and IBM.
The running 1-year positive-negative mix has been slowly trending more negative than the low single-digit counts of earlier weeks. As of this week, the score is 24-8. As recently as the Aug 23 update, the score was 29-3.
We see more bond ETFs joining TLT in the red zone, with IG Corporates (LQD), Consumer Discretionary (XLY), and Communications Services (XLC) joining the negative range.
XLY had several major underperformers, including Lowe’s, Home Depot, DoorDash, Booking Holdings, and TJX. XLC has problems with negative numbers from Meta, Netflix, Comcast, and T-Mobile.
