Monthly Investment Letter - November 2026

November 1, 2026

As we close out October and look ahead, the markets continue to navigate a landscape of resilient growth, persistent inflation, and evolving monetary policy under Chair Kevin Warsh. Drawing on recent research and commentary from First Trust, J.P. Morgan Asset Management, Franklin Templeton, MFS, and PGIM, here is our summary of the key developments and what they mean for portfolios.

Economic Backdrop: Strength Concentrated in AI

Third-quarter real GDP growth came in at a solid 3.4% annualized rate, driven by resilient consumer spending (up roughly 3.8%) and robust business fixed investment, particularly in AI-related capital expenditures. First Trust’s Brian Wesbury notes that much of this strength is concentrated in data centers and AI infrastructure; excluding those areas, the broader economy remains more tepid. Housing and auto sales continue to lag pre-pandemic levels, and net immigration has slowed sharply.

Inflation remains sticky. September PCE rose 3.6% year-over-year, with core PCE at 3.1%. Earlier CPI and PPI readings also surprised to the upside, reinforcing that price pressures have not yet returned to the Fed’s 2% target. Energy costs linked to Middle East tensions continue to contribute to the headline numbers.

Federal Reserve: Pause with a Hawkish Tilt

At its October 28 meeting, the FOMC held the federal funds rate steady at 3.75–4.00% by a 10–2 vote. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented in favor of another 25-basis-point hike. Chair Warsh described economic activity as expanding at a “strong pace,” with resilient spending, robust capital investment, and job gains keeping pace with labor-force growth. He emphasized the need for more data before the next move and reiterated the Committee’s commitment to restoring price stability.

Markets are pricing a meaningful probability of a December hike, though First Trust and others expect any further tightening to be more limited than current futures imply. Warsh also announced changes to the 2027 meeting calendar that will reduce the number of rate-setting sessions, allocating more time to strategic discussions.

Markets: Yields Ease, Equities Choppy

The 10-year Treasury yield finished October near 4.93–4.94%, down from levels above 5.25% earlier in the month and from the multi-decade highs touched in early October. The yield curve has steepened somewhat, and higher starting yields are improving the longer-term return outlook for fixed income. J.P. Morgan’s latest Long-Term Capital Market Assumptions raised the projected annual return for a 60/40 portfolio to 7% over the next 10–15 years, supported by higher real yields and resilient corporate profit margins.

Equities were mixed to modestly lower in October. The S&P 500 closed the month around 7,580, roughly flat to down slightly on the month and still up in the low double-digits year-to-date. AI-related stocks experienced notable volatility amid concerns about the pace and returns on massive capital spending; the Nasdaq and semiconductor indices pulled back at times. MFS’s latest Week in Review noted a risk-off tone to end the month, with smaller and value-oriented stocks outperforming megacaps. Franklin Templeton highlights that historical patterns after the first Fed hike often include near-term volatility followed by positive 12-month returns on average.

Themes from Our Research Partners

•        First Trust emphasizes the bifurcation between booming AI/data-center investment and slower growth elsewhere, and expects one more rate hike, likely in December.

•        J.P. Morgan Asset Management remains constructive on long-term returns, highlighting AI-driven productivity, economic nationalism, and the improved attractiveness of fixed income at higher yields. They continue to see value in diversified alternatives alongside traditional assets.

•        Franklin Templeton notes resilient growth and sticky inflation, with some cracks appearing in the AI trade. They remain constructive on equities overall but flag a potential volatility window following the start of tightening.

•        MFS’s Strategist’s Corner (Rob Almeida) explores the return of competition in technology and software, and the structural drivers of higher rates beyond Fed policy alone. Their Week in Review captured the late-month risk-off tone amid AI funding concerns.

•        PGIM’s outlook stresses a constructive base case with thicker left-tail risks from geopolitics. They favor selectivity, alpha generation over broad beta, income opportunities in fixed income, and real assets as a partial inflation hedge.

Our Stance

The environment continues to reward quality and selectivity. Elevated valuations in parts of the equity market, particularly where AI optimism remains priced in, argue for disciplined positioning. Higher yields have restored meaningful income and diversification benefits in fixed income, while the concentration of growth in AI-related investment creates both opportunity and the risk of uneven outcomes.

With midterm elections this week and additional economic data ahead of the December FOMC meeting, near-term volatility remains possible. We continue to favor high-quality equities with durable earnings power, a measured approach to duration in fixed income, and the use of pullbacks to rebalance toward areas offering better risk-reward. The long-term case for equities remains intact, supported by productivity trends and corporate earnings resilience, but the path is unlikely to be smooth.

As always, we are monitoring developments closely and stand ready to adjust portfolios as the data evolve. Please do not hesitate to reach out with any questions.

Warm regards,

Guided Financial Strategies

Please add the following disclosures to email: The views stated in this letter are not necessarily the opinion of Cetera Wealth Services, LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. . Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing. Fixed-income securities are subject to interest-rate, credit, inflation, and other risks. Bond prices generally fall when interest rates rise.

This letter is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. Past performance is not indicative of future results. Investing involves risk, including possible loss of principal.