Market Update September 2026

Summary

Chad Larson borrows a lesson from motor racing: lap times are not won on the straights, where everyone is flat out, but in the corners, where preparation decides the outcome. He argues the bond market has become the central story, with the US government intervening in its own debt market as the Fed reopens the door to a rate hike. He walks through gold miners' record August, Japan's long-awaited normalization, Canada's trade war, and energy, before showing how the MLD Core Fund posted its best month ever in July, the month it felt worst to own what it owns. The common thread is that patience, cash and the right positioning through flat months are what make the corners pay.

Highlights

• The bond market is now the whole story: The US 10-year topped 4.75% and the 30-year printed above 5.3% in August, its highest yield since 2007, after US national debt crossed $40 trillion.
• A government buying its own bonds is a signal: On August 19, the US Treasury doubled its debt buyback operations to at least $4 billion each. Chad reads this as a sign that long rates have become a policy problem, typically met with intervention, tolerance for inflation and a weaker currency rather than austerity.
• A rate hike is back on the table: The new Fed chair's first Jackson Hole speech signalled inflation has not meaningfully slowed, lifting the odds of a September hike to roughly 50% to 60%.
• Gold miners delivered the best trade of August: Six weeks after commentary declared the gold trade dead, the global gold miners index rose about 43% in one month, its best month in history, while gold itself gained about 10%.
• Miner economics are the best in a generation: Since late 2022, realized gold prices have risen about 160% while all-in sustaining costs rose about 53%, and capital discipline is far stronger than in 2011.
• Gold is downforce, not the engine: It creates a little drag in smooth years but lets a portfolio hold its line when conditions get rough. MLD remains overweight and prefers producers to the metal.
• Japan is the most underpriced risk: The yen broke back through 160 despite a coordinated $75 billion intervention that held for about 11 days, while 10-year Japanese government bond yields reached about 2.95%, a multi-decade high.
• The carry trade is being repriced: Rising Japanese yields make cheap yen funding more expensive and give Japanese institutions a reason to bring money home, pressuring global liquidity and US long bonds. Normalization is also a catalyst for Japanese equities and financials.
• Canada is being pushed toward resources and infrastructure: New US tariffs and collapsed trade talks are hurting manufacturing, but the TSX is holding near record levels because its weight is in materials and energy. Interest in an idle Brampton auto plant from an EV maker and two defence contractors shows where the economy is heading.
• Energy is finally behaving: Brent finished August above $90, up about 33% from a year ago, rewarding an early position.
• Best month in the MLD Core Fund's history: The fund gained 7.35% in July, close to matching the entire first half of the year, and did it while holding nearly 20% cash.
• Alterna has a strong two-year record: Two years with no negative quarters, roughly 7.7% annualized net returns, a 6% distribution yield, a 1.06% maximum drawdown and a Sharpe ratio of 2.08, with near-zero correlation to Canadian equities.
• Two new Core Fund series are coming: A corporate class series for non-registered accounts, and a series designed to accept highly appreciated securities for investors locked into concentrated positions by embedded gains.

Key Insights

1. Returns arrive unevenly, and the flat months are where you get set up.

The MLD Core Fund's best month came immediately after gold bottomed in a 26% drawdown and the trade was widely written off. Six months of seemingly flat statements were the preparation that made July possible. Investors who abandon a position on the straights are rarely in place when the corner arrives.

2. Cash and caution are not the opposite of performance.

Carrying close to 20% cash felt like leaving money on the table while markets made new highs. Instead, that dry powder gave the team the ability to lean into what was working when it mattered, rather than being forced to sell something at the worst moment. Optionality is a source of return, not a drag on it.

3. In a world of growing debt and intervention, own what cannot be printed or moved.

Governments buying their own bonds, central banks weighing hikes, Japan normalizing and a trade war reshaping Canada all point to the same conclusion: favour gold producers, energy, real assets and infrastructure, alongside a diversified income sleeve that is not simply another proxy for the stock market. As Chad puts it, own the skeleton, not the muscle.

Conclusion

The episode argues that the forces now shaping markets, from US debt and bond intervention to Japanese normalization and Canada's trade war, reward investors who are positioned before conditions turn rather than those chasing what has already worked. Chad remains overweight gold miners, energy and real assets, continues to carry dry powder, and sees private income and new tax-efficient fund structures as tools to keep portfolios holdable through every part of the lap.

The TakeawayThe straights are where you get set up and the corners are where you get paid. Stay patient through the flat months, keep dry powder on hand, and own the things the world needs that governments cannot print.

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