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Economy & Markets 

  • The U.S. economy remains on solid footing, supported by stable employment and resilient consumer spending, while inflation remains above the Federal Reserve's 2% target. Against this backdrop, the Fed appears likely to raise rates at its September meeting. Attention will then turn to whether further rate hikes will be needed to bring inflation back toward target. 
  • Inflation remains elevated, with consumer prices in August rising 3.4% over the past year. Core CPI, which excludes food and energy, increased 2.4%, near its lowest level in five years. Limited spillover from higher energy prices into Core CPI suggests inflation may continue to moderate with only modest tightening by the Fed.

 Equities

  • The S&P 500 rose nearly 3% in August, closing out the month near record levels after touching an all-time high mid-month. Strong performance in the Energy, Technology, Materials and Health Care sectors more than offset headwinds from interest rate sensitive sectors like Utilities and REITs. International stocks performed similarly to the S&P 500 during the month. 
  • Second quarter corporate earnings results will be remembered as one of the strongest quarterly reports in years. Analysts remain optimistic for both the remainder of 2026 and 2027. With tailwinds from AI-related capital spending expected to continue, consensus expectations for aggregate S&P 500 profit growth sit at +28% for 2026 and +17% in 2027.

Fixed Income 

  • The Treasury yield curve flattened during the month as investors reassessed the Federal Reserve's expected path for future interest rate policy. 
  • Investment-grade (IG) credit spreads finished the month at 78 basis points, while all-in yields remained attractive at 5.49%.

Employment

  • In August, the U.S. economy added 162,000 jobs while the unemployment rate held steady at 4.1%. The U.S. has added an average of 80,000 jobs per month this year which compares to roughly 15,000 per month in 2025. 
  • It has surprised many economists that wage growth has not accelerated due to the reduction in labor force participation. Wages grew by 3.1% from a year ago, which is less than the 3.4% rise in inflation.

Federal Reserve 

  • At the Jackson Hole Fed meeting last month, Chairman Warsh gave his most “hawkish” presentation about containing the inflation rate, raising the odds for a rate increase at the September meeting. 
  • The debate among bond investors is no longer whether the Fed will raise rates, but how much additional tightening may be needed. We believe the economy remains resilient enough to absorb a gradual increase in interest rates.

Issues to Watch

  • Attacks on a key Saudi oil pipeline that bypasses the Strait of Hormuz pushed crude prices above $100 per barrel, creating a headwind for equity markets. 
  • As the fall elections approach, political engagement is increasing across the spectrum, while many voters remain dissatisfied with the major parties. This uncertainty could contribute to elevated market volatility in the months ahead.
September 2026 economic metrics

1 Data provided by Bloomberg. Metrics are as of month-end or most recent publication
2 Provided by U.S. Real GDP Economic Forecast Survey Median
3 Provided by World Real GDP Economic Forecast Survey Median
4 Provided by Bloomberg Intelligence Forecast
5 Provided by World Probability Forecast
6 Arrows represent a month-over-month change

September 2026 index returns

Asset Allocation / Tactical Positioning 

asset allocation and tactical positioning data for September 2026

7 Equity tactical weights are relative to the Cambridge Trust Wealth Management Core Equity allocation and is comprised of 80% S&P 500 and 20% MSCI AC World ex-U.S. Index.
8 Fixed Income tactical weights are relative to the Cambridge Trust Wealth Management Core Taxable allocation and is comprised of 100% Barclays Intermediate Gov/Credit Index.
9 Below investment grade holdings include high yield and emerging market debt mutual funds. Represents an out-of-benchmark allocation that will be reflected as an overweight position relative to the Barclays Intermediate Gov/Credit Index if any allocation is held.
10 Alternative tactical weights represent an out-of-benchmark allocation that will be reflected as an overweight position when utilized and neutral position when not.
11 Direction arrow highlights any recent changes of the overall allocation after a recent tactical asset allocation or strategy change. Last changes were made at July 2026 Asset Allocation Committee meeting.

 

Views are as of September 2026 and are subject to change based on market conditions and other factors. The opinions expressed herein are those of the author(s), and do not necessarily reflect those of Eastern Bankshares, Inc., Eastern Bank, or any affiliated entities. Views and opinions expressed are current as of the date appearing on this material; all views and opinions herein are subject to change without notice based on market conditions and other factors. These views and opinions should not be construed as a recommendation for any specific security or sector. This material is for your private information, and we are not soliciting any action based on it. The information in this report has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is neither representation nor warranty as to the accuracy of, nor liability for any decisions made based on such information. Past performance does not guarantee future performance.