In Your Money This Week, we had one of those weeks where good news was bad news and bad news was good news.
The PCE inflation report came in cool, but bond yields went up. Then today’s jobs report was well below forecasts, stocks went up, and yields fell as the market priced in less chance of an October rate hike.
We also looked at how the market has changed since earlier this year. The Equal Weight S&P 500 and small caps had been outperforming, but since mid-August they’ve struggled relative to the S&P 500, which is back near its all-time high.
The bigger discussion was bonds.
The Bloomberg Aggregate Bond Index is down this year, and its trailing five-year return is slightly negative after the sharp rise in yields. That has been frustrating for bond investors, but it also raises the question of whether bonds are becoming more attractive.
Higher yields mean more income and a bigger cushion if rates rise further. Vanguard recently made the case that sharp increases in yields have historically been followed by stronger bond returns.
We also talked about an AI tool Andrew is finally excited about, what people tend to struggle with after a liquidity event when they suddenly have a much larger portfolio, our book club, and college football.
Andrew and I get into this and more in this week’s Your Money This Week video followed by my Weekly Reads and latest book recommendation.
Weekly Reads
A Brutal Bond Market by A Wealth of Common Sense
The bond article I discussed in today’s video. In it, Ben shares that there’s never been a five-year negative trailing return for the Bloomberg Aggregate Bond index. The last ten years haven’t been great either, and the current ten-year real returns are the worst ever. While we can’t predict the future, the set up for bond investors is improving, something the article from Vanguard next emphasizes.
How 2026 may set the table for stronger bond returns by Vanguard
This one was also discussed in the video. Yes, bonds are struggling now, but sharp yield spikes have historically preceded strong returns. Higher yields do two things: they provide more income and a larger cushion if rates continue to rise.
Anthropic’s IPO prospectus shows sweeping AI vision, surging costs: Reuters by CNBC
Anthropic’s revenue surged twelvefold in 2025 to nearly $4.6 billion, but it still lost more than $8 billion on an operating basis as total operating expenses reached $12.65 billion, including $7.33 billion spent on compute and infrastructure. Its reported net loss was roughly $42 billion, although about $34 billion of that was an accounting charge tied to financing instruments rather than operating spending, and the company had $20.28 billion in cash and short-term investments at year-end. The major financial challenge is the enormous capital required to keep competing, including $518 billion of future cloud, computing and infrastructure obligations, while nearly a quarter of revenue came from just two customers and many large clients are not locked into long-term contracts. Investors therefore face a company growing extraordinarily quickly but still deeply unprofitable, highly dependent on continued infrastructure spending, customer retention and confidence that future AI economics can justify a potential valuation above $2 trillion.
What history says about 2026 midterm elections and market performance by BlackRock
Midterm years have historically been weaker for U.S. stocks, averaging 7.5% versus 12.4% in non-midterm years, but 2026 has been unusually strong so far, with U.S. stocks up 13.1% through August—the sixth-best start to a midterm year since 1926. Since 1970, stocks have typically begun rallying about 22 trading days before midterm elections as uncertainty falls, and the average six-month return after midterms has been 14.1% versus 5.7% in non-midterm years. Outcomes have mattered somewhat: when one party lost unified control of the presidency and Congress, the average six-month post-election return was 10.4%, compared with 16.1% when control was gained or Congress remained divided
What If Your Estate Planning Strategy Works Too Well? by Savant Wealth Management
Estate plans should be revisited periodically because strategies that work exceptionally well—such as transferring a fast-growing business to a trust—can create new problems, including large ongoing tax bills for the person who established the trust or insurance coverage that no longer matches the family’s needs. Reviews should look beyond estate taxes to whether trust structures, insurance, cash-flow burdens, trustees and beneficiary arrangements still fit the family’s current circumstances and goals. Families should also clarify what inherited wealth is meant to accomplish and communicate those intentions, because a trust can hold assets for decades but cannot by itself convey judgment, expectations or family values.
The Day Freedom Died: The Colfax Massacre, the Supreme Court, and the Betrayal of Reconstruction by Charles Lane
The untold story of the massacre of a Southern town’s freedmen and a white lawyer’s battle to bring the killers to justice: “Riveting.” —The New York Times Book Review
