One Play Doesn’t Decide the Game

I have spent the last two weekends in Athens watching the Dawgs start the 2026 college football season with two convincing victories. For me, there aren’t many better times of the year. College football is back, and Saturdays once again revolve around games that somehow seem far more important than they probably should. Fingers crossed this unseasonably hot weather finally moves on, and it starts to actually feel like football season.

As I was sitting in Sanford Stadium, it occurred to me that football and investing have a little in common. Yes, both games were blowouts, giving me a lot of time to think. In both, it is very easy to get caught up in what just happened. One bad play can make 93,033 people nervous (a totally random number, I promise). One bad economic report or a rough week in the market can quickly change investor sentiment. But games aren’t won on one play, and long-term investment results aren’t determined by one inflation report, one Fed meeting, or one bad week in the market.

That is probably a pretty good way to think about markets right now. It’s also something I should remind myself of every Saturday.

A Lot Going On, But Markets Are Holding Up

There has certainly been no shortage of things for investors to worry about. With increased hostilities in the Middle East, oil prices have moved higher and are now hovering above $100 per barrel.[i] Inflation remains above the Fed’s comfort level, interest rates have risen, and geopolitical risks haven’t gone away. At the same time, stocks continue to hold up remarkably well. Not surprisingly, markets have been a little more volatile lately. It is important to put that volatility in perspective. Even after some recent signs of weakness, the major stock indexes remain solidly positive for the year, with the S&P up over 11%.[ii] In other words, there have been plenty of reasons for stocks to go down this year, and yet they haven’t.

What Is Moving Markets?

Over the weekend, leaders of major AI companies, including Elon Musk (xAI), OpenAI’s Sam Altman (ChatGPT), and Anthropic’s Dario Amodei (Claude), spoke out about the possible need to “slow down” on the buildout and capabilities of the models they are constructing.[iii]  While it is a complex problem, the simple explanation is that they fear that without some regulation, there is a small (but real) possibility that the models could start improving their own capabilities so quickly that humans would lose the ability to control them. While that threat may not be imminent, these leaders concede that more needs to be done to address the issue before it is too late. This caused stocks tied to the “AI trade” to sell off, and many of those stocks have been a large driver of the positive returns of 2026.[iv] This is a very recent development, but so far, the pullback seems to be minimal, as there is not a consensus that an AI slowdown actually takes place.[v]

Another major issue is inflation, and more specifically the impact higher energy prices are having on inflation. Inflation is well below the levels we experienced a few years ago, but it remains meaningfully above the Fed’s 2% target. At the same time, the labor market and overall economy continue to hold up reasonably well. That combination puts the Federal Reserve in an interesting position. The economy isn’t exactly asking for help, but inflation is telling the Fed that monetary policy may not be restrictive enough.

Which brings us to this week’s Fed meeting.

The Fed Raises Rates

On Wednesday, the Federal Reserve raised its benchmark interest rate by 0.25%, the first increase since July 2023. Normally, higher interest rates aren’t something investors cheer about. Higher rates increase borrowing costs, can slow economic activity, and create more competition for stocks from bonds and cash.

But just like with the recent market volatility, context matters.

In this case, I don’t think the Fed raising rates should necessarily be viewed as bad news. In some ways, the bigger risk would have been the Fed doing nothing while inflation and inflation expectations continued moving higher. The quarter-point increase itself wasn’t much of a surprise. It also signals that the Fed will continue to be an independent body and is willing to disagree with the White House, which has continually called for lower rates.

The more important question is what happens next. Does this turn into a series of rate hikes, or is the Fed simply sending a message that it is willing to act if inflation doesn’t cooperate? A quarter-point or even half-point increase probably doesn’t change the outlook for the economy or markets very much. A prolonged tightening cycle would be a different story.

Don’t Just Watch the Fed Funds Rate

One thing we are watching particularly closely is the bond market. Longer-term Treasury yields have moved considerably higher, with the 10-year U.S. Treasury bond peaking at over 5% Tuesday morning, its highest point since July 2007.[vi] This is one of the reasons we have been lowering the duration of the fixed-income portion of many client portfolios. Duration is essentially a measure of how sensitive a bond is to changes in interest rates. The longer the duration, the more the value of the bond will generally move when interest rates change. As a simple rule of thumb, a bond with a duration of 10 years would be expected to decline roughly 10% if interest rates increased by 1%, while a bond with a duration of one year would decline roughly 1%. The reverse is also true if rates fall. With longer-term rates moving higher, we prefer to take less interest-rate risk and keep more of our fixed-income exposure in shorter-duration investments.

Longer-term rates matter because they influence everything from mortgages and corporate borrowing costs to how investors value stocks. But higher rates also create opportunities. For years following the financial crisis, investors earned almost nothing from high-quality bonds. Today, we can build fixed-income portfolios with yields that are much more attractive. So, while higher rates create some headwinds for stocks, the economy, and the value of existing bonds, they also make the fixed-income side of portfolios considerably more attractive.

Keep Playing the Game

If you watch enough college football, you know how quickly the narrative can change. Your team gives up a touchdown on the opening drive, and suddenly everyone thinks the game is over. Twenty minutes later, you are ahead by two touchdowns, and nobody remembers the first drive.

Markets aren’t much different. Over the past few years, investors have dealt with inflation, rapidly changing interest rates, wars, elections, recession fears, an AI boom, an AI selloff, and plenty of other reasons to believe the next problem was going to derail the market. And yet, investors who stayed invested have seen their balances go up.

That doesn’t mean we ignore risks. In fact, it is quite the opposite. We continue to adjust portfolios as conditions change, look for opportunities, and evaluate whether the risks we’re taking are appropriately compensated.

Since this will not be the last time you hear from me during football season, I don’t feel the need to give a season-long prediction. However, if you are a Georgia Bulldog, I think you will be happy most (all?) Saturdays this fall. If you are an Atlanta Falcons fan, unfortunately, I think you are in for some long Sundays.

Will

Disclosure: The views and opinions expressed are of Persium Advisors, LLC as of the date of publication and are subject to change. This commentary is provided for educational purposes only and should not be construed as investment advice. Persium Advisors, LLC is a SEC-registered investment adviser located in Atlanta, GA.

[i] https://www.reuters.com/business/energy/brent-crude-rises-above-100-barrel-middle-east-conflict-escalates-2026-09-09/

[ii] https://www.marketwatch.com/investing/index/spx

[iii] https://www.cbsnews.com/news/tech-stock-selloff-ai-warning/

[iv] https://finance.yahoo.com/markets/stocks/articles/goldman-sachs-says-ai-driving-180024217.html

[v] https://www.nbcnews.com/business/markets/stocks-tumble-ai-leaders-warning-slowdown-ipos-amodei-altman-rcna597643

[vi] https://thehill.com/business/6091487-us-treasury-yield-19-year-high/