Market Summary: September 2026

Both stocks and bonds were generally negative in September as markets contended with higher oil prices, large fiscal deficits, rising interest rates, and renewed inflation concerns. The yield on the Bloomberg Global Treasuries Index exceeded 4% for the first time since 2007, while long-dated US Treasury yields reached their highest levels since 2002. In the UK, the 10-year gilt yield rose to 5.42%, and the 30-year approached 6%, a level last seen in 1998. The German 10-year Bund yield climbed to 3.59%, its highest in more than 15 years, while the 10-year JGB yield reached 3.06%, its highest since 1996. Credit spreads widened, with global high-yield spreads rising roughly 42 bps to 314 bps.

Most major central banks turned more hawkish. The Fed unanimously raised its benchmark rate by 25 bps to a range of 3.75%–4.00%, its first hike since 2023. The ECB, BoJ, and RBA also raised rates by 25 bps. The BoE held rates steady in a 6–3 vote, with three members favoring a hike. Brazil went the other way, cutting rates for a fifth consecutive meeting.

In equity markets, the MSCI World Index fell 1.2% in US dollar terms. The S&P 500 slipped 0.3%, but its equal-weight counterpart fell a much steeper 4.8%, highlighting continued concentration. Technology (+4.5%) and communication services (+4.3%) were the only S&P 500 sectors to advance, while financials fell 7.2%. In Europe, the STOXX 600 ended a five-month winning streak, with energy and technology the only sectors to post gains. In emerging markets, Taiwan and South Korea rose on AI-related semiconductor demand, while oil-importing economies such as India and Indonesia declined sharply.

Brent crude rose more than 10% and briefly traded above USD 100 per barrel. The US Dollar Index gained 2.0%, gold fell more than 6%, and the yen rose 1.5% against the dollar.

Economic data was more resilient than expected. The US flash composite PMI rose to 58.4, its highest since July 2021, and the eurozone composite PMI reached a 41-month high. Inflation, however, remained elevated: US CPI rose 3.4% year-over-year in August, and eurozone inflation accelerated to 3.8% in September, above expectations. A softer-than-expected core PCE reading at month-end was a welcome surprise, cutting the market-implied probability of an October Fed hike from roughly 70% to about 40%. US consumer confidence, meanwhile, fell to its lowest level since 2014.

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