Market Update: Third-quarter 2026 recap

Commodity resurgence gives investors pause

In the third quarter of 2026, equity markets moved sideways for much of the period. Rising commodity prices paused the AI equity rally, while oil prices rebounded from the previous quarter’s decline and long-term bonds fell sharply. As a result, equities posted a modest quarterly return, while bonds did not fare as well.

Sector performance varied widely this quarter. Energy was the best-performing sector, supported by rising oil prices, and returned more than double the second-best-performing sector. Utilities was the worst-performing sector. Four sectors moved higher during the quarter, while seven moved lower, and domestic equities outperformed international equities.

Both the broader bond market and longer-dated bonds fell during the quarter. As oil prices renewed inflation worries, the Federal Reserve took a more hawkish stance, raising the target short-term interest rate range at its September meeting, the first hike since July 2023.

Gold rebounded from its Q2 loss with a strong Q3 performance. Many of our strategies invest in gold to capitalize on its positive periods, which can occur when stocks or bonds are under pressure, reinforcing the role of our strategies across market conditions.

Our equity, core, and alternative strategies remained mostly aggressive, while a larger percentage of our bond and core strategies shifted toward more defensive positioning during the quarter. At quarter-end, among our QFC, ETF, and Axos platform strategies, 76% of our equity strategies were over 90% invested in non-defensive assets, showing continued aggressive positioning where appropriate. 

•  27% of our bond strategies had over 50% in non-defensive asset exposures

•  79% of our core strategies held over 50% in non-defensive assets 

•  86% of our alternative strategies had over 50% in non-defensive asset exposures

Equity markets coasted along, gold rebounded, and bonds tumbled this quarter. The takeaway: markets can shift quickly, so portfolios should adapt. Our strategies monitor market trends and adjust investor portfolios as the environment changes.