Published September 18, 2026
Inflation is the general increase in the prices of goods and services across an economy over time, which reduces the purchasing power of money.
Have a look at these price increases for everyday expenses courtesy of Charlie Bilello at Creative Planning:
It sounds hyperbolic, but inflation is a thief, a thief that steals from your future. Over the last 7 years inflation has rocketed higher after being relatively tame for many years. We examine a 7-year period now because this includes the COVID stimulus and a host of economic disruptions that changed the fundamentals of the US economy. The change in the rate of inflation due to COVID and the COVID stimulus is readily apparent in following chart.
In this time period, the recent months are compressed and hard to delineate, but inflation had been falling from its peak until spring this year, with recent increases primarily driven by tariffs and fuel prices due the wars with Iran and in Ukraine. Just this week the Federal Reserve Bank increased rates by a quarter point for the first time in 3 years in an effort to rein in inflation, saying that they may have to raise rates again this year if the data does not improve.
So the question that many ask is “what will make prices go down?” There are several possibilities. First, the path the Fed is on, increases in interest rates, generally cools demand and can help stop prices from continuing to rise. Related to this is tightening credit conditions but also helpful are reductions in commodity prices (i.e. fuel, metals, timber etc.). Timber prices are already at their low for the year due in part to weak demand for new homes. And with respect to fuel prices, companies are reluctant to lower prices when their input costs fall, rather they tend to want to make up for all the extra money they spent on fuel in the past. The broader answer is demand destruction and recessions. Nothing lowers prices faster than a bad economy.
The good news here for savers, is that interest rates are relatively high. Bank CDs can be easily found paying over 4% and sometimes as high at 4.75% depending on the term length. Is now a good time to lock in those rates, history says it may well be.
Market Update
On Monday, the NASDAQ 100 fell -0.8% while the S&P 500 fared better at -0.5% with the Russell 2000 small cap index only falling -0.4%. The declines were generally related to the usual suspects of rising oil prices and rising interest rates but also to AI safety related warnings from top executives at Anthropic, OpenAI, and xAI who publicly urged a slowdown in advanced AI development over safety and governance concerns.
Tuesday, the sabotage and resulting closure of the new Saudi pipeline rattled investors sending crude prices ever higher and further fueled fears inflation would march higher given reports of diesel fuel shortages starting to occur. A key crypto regulation bill, the Clarity Act, failed to gain enough votes in the Senate and crypto currencies plummeted late in the day. On the day all stock indices lost ground: S&P 500: -0.45%, the NASDAQ 100 -0.65%, and the Russell 2000 -0.8%
Wednesday bought the first Fed rate hike in three years. In a major policy shift, the Federal Reserve unanimously raised its benchmark interest rate by 25 basis points to a 3.75%–4.00% range. New Fed Chair Kevin Warsh spooked equities by warning that inflation has been “too high for too long,” sparking a steep intraday drop for stocks. Economic data showed US retail sales jumped 1.2% in August, significantly beating forecasts and adding to the Fed’s justification for keeping interest rates elevated. For the day, both the S&P500 and the Russell 2000 lost about -0.4% while the NASDAQ100 closed flat.
Thursday, stocks staged a relief rally after as investors adjusted to a new Fed posture. The 10Y treasury yield finally slipped back below the psychologically critical 5% mark and energy market pressures eased significantly, with crude falling back under $100 a barrel amid reports that Saudi Arabia was making progress on its pipeline repairs. For the day all the indices closed with gains, the S&P500 gained 1.1%, the NASDAQ 100 was up 1.7% and the Russell 2000 finished up over 0.5%.
Friday, stocks opened lower despite falling oil prices however interest rates crept higher all day. Technology stocks were notably stronger than the rest of the market, with semiconductor stocks leading the way up over 2.2%.
For the week, small cap stocks (IWM) retreated -1.5% while the S&P500 (SPY) was essentially unchanged and the NASDAQ100 (QQQ) outperformed gaining 0.9%.
Warm wishes and until next week.