Key Events: Benign inflation data supports Fed actions
The economic data catch-up continued as data releases from previous months circulate in irregular fashion. Last week’s employment data was mixed with the rise in the unemployment rate to 4.6% for November leaving the most important mark.
Surprisingly soft core CPI inflation data released later in the week trumped the employment data and set the stage for a recovery rally that favored large cap growth stocks.
Market Review: Marking time as the year winds down
Stocks were under pressure the first part of the week but recovered well after the benign inflation data. Large cap equities eked out a modest gain with large cap growth leading the recovery. Emerging markets and small caps reverted after strong performance for the last month.
Bonds gained ground as interest rates fell modestly for the week.
Outlook: Plans versus planning
Dwight Eisenhower is credited with several versions of the quote “plans are useless, but planning is indispensable”.1 The statement stands the test of time since the process of planning develops the priorities and situational awareness though the plan itself inevitably changes. Whether you are preparing for the unknown as a portfolio manager, financial advisor or Fed governor, it is the process of planning that is paramount.
As we look towards 2026, the trends underpinning employment and inflation hold the keys for Fed policy. Last week’s inflation print was encouraging but it most likely understates current reality and remains above target. Directionally, the rate of unemployment looks concerning, but the level remains historically low. Fed policymakers may develop plans to support growth with additional rate cuts should the unemployment rate weaken further. However, the playbook might require an adjustment if the cost of goods for consumers doesn’t cooperate.
A resilient planning process requires versatility, and the Fed may need it more than ever in 2026. Asset allocators face the same circumstances. Proper diversification across geography, market cap and style can produce strong portfolio attributes, such as income and low volatility, that can weather storms that could arise from unforeseen challenges from weaker employment or more persistent inflation. Our portfolios emphasize diversification to provide durability and flexibility.
This material is intended to be educational in nature , and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended as any form of substitute for individualized investment advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors. OneAscent can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.
Source: Various sources show differing versions of the Eisenhower quote that stems from ”In preparing for battle I have always found that plans are useless, but planning is indispensable.” This is sometimes written as “plans are nothing; planning is everything” or “plans are worthless, planning is everything”.
Market Returns reference the following indices: Large Cap – S&P 500, Mid Cap Growth – Russell Midcap growth, Mid Cap Value – Russell Midcap Value, Small Cap – Russell 2000, Developed – MSCI EAFE, Emerging – MSCI Emerging Markets, Aggregate – Bloomberg US Aggregate, High Yield – Bloomberg High Yield
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