---
title: What Goes Up, Must Come Down? – Q3 2026 Market Commentary
description: We continue to deal with the ups and downs of both the markets and life, day by day. More recently, however, it is hard not to notice that a lot more things seem to be “up”; and just like Chicken Little, we can’t help but wonder when they might come back down, or the sky may “fall.”
image: https://insights.ulrichcg.com/hubfs/Carousel%20painted%20horse.jpg
---

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# What Goes Up, Must Come Down? – Q3 2026 Market Commentary

[![Whitney E. Solcher, CFA, Partner, Senior Advisor & Chief Investment Officer](https://insights.ulrichcg.com/hs-fs/hubfs/Whitney%20Solcher.jpg?width=36&height=36&name=Whitney%20Solcher.jpg)](https://insights.ulrichcg.com/author/whitney-e-solcher-cfa) 

 By [Whitney E. Solcher, CFA, Partner, Senior Advisor & Chief Investment Officer](https://insights.ulrichcg.com/author/whitney-e-solcher-cfa) 

 •  Published October 5, 2026 at 2:37 PM CDT

![Carousel painted horse](https://insights.ulrichcg.com/hubfs/Carousel%20painted%20horse.jpg)

The saying “What Goes Up, Must Come Down,” was made popular by the band Blood, Sweat & Tears in their classic 1968 hit, titled the “Spinning Wheel.” This reference to the circle of life and remaining grounded through good times and hardship is much akin to the investing mantra of “staying the course.” Keeping calm and avoiding panic as markets move through their inevitable high and low cycles can be easier said than done. While it may feel like we live in especially volatile times, with ongoing wars, the “takeover” of AI, and continual bi-partisan banter as we head into election season, uncertainty is nothing new. The 1960s were also a tumultuous period characterized by heavy civil and political discourse to which the songwriter envisioned his lyrics as a call to “lighten up” the mood. Even the recurring phrase “ride a painted pony” referred to a carousel, reminding listeners to enjoy the ride and let life unfold rather than trying to control every facet and opinion along the way.

We continue to deal with the ups and downs of both the markets and life, day by day. More recently, however, it is hard not to notice that a lot more things seem to be “up”; and just like Chicken Little, we can’t help but wonder when they might come back down, or the sky may “fall.” Beginning with oil prices, and perhaps more importantly diesel, the war with Iran has continued much longer than initially expected. Strategic petroleum reserves (SPRs) are dangerously low, neighboring Middle Eastern pipelines and equipment are damaged, and refiners are running at full capacity in the U.S. Prices at the pump are “sky high” for consumers, putting political pressure on the President and current administration. Crack spreads for diesel hit a record $100/bbl, further exacerbating the situation, as diesel costs filter through to everything farmed or freighted. The effects of the pass-through will linger for some time even if the conflict is resolved in short order. Additionally, the unknown timeline of a resolution makes it difficult for businesses to budget and plan accordingly, forcing them to raise prices to protect against falling margins and once more feeding the circuitous fuel of supply driven inflation.

Other notable items that are “up” include our federal deficit. Despite efforts by the Trump administration to cut government spending and waste through the efforts of DOGE, years of elevated federal spending, including the prolonged pandemic stimulus, combined with massive defense spending on two wars, have left our nation’s coffers in a bit of a pickle. On the revenue side of the house, despite the exorbitant profits we hear about from the hyperscalers, some of the major tech giants have actually seen their tax bills drop over the last two years. Why, you may ask? Tax incentives such as accelerated bonus depreciation, R&D deductions, equipment and data center write-offs, and other infrastructure incentives have played a role. According to the Institute on Taxation and Economic Policy (ITEP), the top five largest technology firms’ effective tax rate fell to 4.5% from the standard statutory corporate rate of 21%. Perhaps we should start issuing W-2s to the estimated 28.6 million AI agents currently in existence (expected to rise to 2.2 billion by 2030) to help make up the budgetary shortfall.

And this brings us to interest rates, which are also up; way up! The long-end of the curve has been on a tear with the 10-Year Treasury rising from 4.17% to 5.28% year-to-date through quarter end, and the 30-year Treasury rising from 4.84% to 5.63%. Several factors have contributed, including two which we previously addressed: 1) the U.S. deficit, and 2) AI Hyperscalers. Economics 101 teaches us that interest rates can rise when purchasers of a country’s debt have increased concerns about the financial wherewithal of a nation to repay its obligations. This leads to less buyers and thus higher interest rates. Rates, however, have been rising for many sovereigns around the globe, not just the U.S. Another theory suggests that Hyperscalers are competing with government debt. Their massive issuance of paper (bonds) to pay for their cap-ex and infrastructure spending looks attractive when compared to Treasury bonds, wooing some pension funds and insurance companies to substitute sovereign paper in place of corporate. Lastly, hedge funds have increased their share of Treasury holdings by nearly five-fold over the last few years, creating a more volatile holder of government bonds in general.

All of these factors lead us to the final development that was up this quarter; the Fed’s interest rate decision. Just like long-term rates, short-term rates are rising too, as the Federal Reserve announced a much anticipated 25 basis point (0.25%) hike to the Federal Funds Rate with a target of 3.75-4.0%. Chairman Kevin Warsh was able to build 100% consensus, most prominently driven by persistent inflation data (core PCE ex. food and energy was up +3.3% year over year in July), steady economic growth (GDP was +2.2% for the second quarter), and continued resilience in the employment data (August unemployment remained unchanged at 4.1%). Currently Fed Fund future markets are pricing in a ~80% chance of at least one rate hike by December and a ~18% chance of a half point hike.

In other news, there are a few things that are down, but ironically could be considered positive data. Gold has made a significant retracement off its highs in the $5500s to around $4200 a troy ounce. Long considered a barometer of fear and a safe haven asset, investors do not appear to be running for the sidelines and the U.S. dollar has strengthened in recent weeks. Furthermore, despite the uptick in long-term rates, credit spreads (the spread between Treasuries and riskier corporate bonds) do not appear to be following the same trajectory. Widening spreads can be a sign of negative sentiment so their relative stability provides another silver lining to an otherwise painful quarter in the bond markets.

### **Closing Thoughts**

With all of the excitement with the economy, we failed to mention that equities are also up for the year … across the board. We started 2026 questioning whether we could produce a four-peat (four years of positive returns), and so far, despite numerous headwinds, the outlook is rosy. The Merry Go Round continues to spin, and while some ponies may be going down, others are springing upward, and just like your portfolio and long-term objectives, we are always marching them forward.

Warm regards,  
John P. Ulrich, CFP®, President & CEO  
Whitney E. Solcher, CFA, Chief Investment Officer

### **Q3 Market Commentary**

- Global equities held up remarkably well during a volatile quarter. World stock markets added roughly $3 trillion in value and ended Q3 about 2% below their all-time highs. U.S. gains remained concentrated, with large technology and AI-related companies doing much of the heavy lifting. The S&P 500 gained roughly 2.3% for the quarter and the Nasdaq Composite rose 3.3%, while the Dow declined 2.3%.
- The much bigger story was the bond market. The 10-year Treasury yield climbed above 5.3% at quarter-end, reaching its highest level since 2002. Yields also moved to multi-decade or multi-year highs in Japan, Germany, France, and the UK as investors adjusted to persistent inflation, higher energy prices, and the prospect of interest rates remaining elevated.
- Oil added another source of pressure. Brent crude rose roughly 40% during the quarter and finished above $100 per barrel, leaving it about 70% higher for the year. Higher energy costs complicated the inflation outlook just as bond markets were already pushing borrowing costs higher.
- The dollar had a more mixed quarter with the DXY U.S. Dollar index rising 0.3%. Currency markets were also unusually active during the quarter, including a rare coordinated U.S.-Japan intervention in July to support the yen.
- Heading into the fourth quarter, markets are balancing an economy that continues to show resilience against renewed inflation and financing pressure. Second-quarter U.S. GDP was revised up to 2.2%, while August core PCE inflation held at 3.0%. European equities had a more difficult quarter, with the STOXX 600 declining about 1% as rising yields weighed on markets.

Advisory services provided through Ulrich Investment Consultants, an SEC Registered Investment Adviser. SEC registration does not imply any level of skill, expertise, or training, and should not be interpreted as endorsement or approval by the Commission. The information contained in this Market Update reflects the opinions, views, and market observations of Ulrich Investment Consultants (“UIC”) as of the date indicated and is subject to change without notice. This commentary is provided for informational and educational purposes only and is not intended to constitute investment advice, a recommendation, or a solicitation to buy or sell any security or investment strategy. The market and economic observations discussed herein are general in nature and do not take into account the specific investment objectives, financial situation, or needs of any particular client. References to market performance, asset classes, economic conditions, or investment themes are based on publicly available information and sources believed to be reliable; however, such information has not been independently verified and its accuracy or completeness cannot be guaranteed. Any forward-looking statements, projections, expectations, or forecasts are based on current assumptions and market conditions and involve known and unknown risks and uncertainties. Actual results, market behavior, and economic outcomes may differ materially from those expressed or implied. Past market performance is not indicative of future results, and no assurance can be given that any market outlook, investment strategy, or asset class will achieve favorable results. This Market Update is not intended to provide personalized investment advice and should not be relied upon as the sole basis for any investment decision. Investment decisions should be made based on an individual’s objectives, risk tolerance, and financial circumstances, in consultation with a qualified financial professional.  
Artificial intelligence tools (“AI”) are utilized to assist in generating certain written content and visual materials. All AI-generated content is reviewed, edited, and approved by UIC prior to use. AI tools are used solely to enhance efficiency in drafting and designing and are not relied upon to create investment advice or other recommendations. All views and information stated reflect the opinion of UIC.

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