September Monthly Market Review

An excerpt from our September 2026 Monthly Market Review:

Government bond yields rose further in September approaching and, in many cases, breaching quarter century highs. Countries with the heaviest debt burdens saw the largest yield increases. The main catalyst for the increase in yields remains that expectations of continued inflationary pressure will result in a sustained tightening cycle. The Fed, the ECB, and the Bank of Japan were among the major central banks raising rates by 25 basis points in September. Markets so far judge that the tightening cycle will largely contain inflation notwithstanding strong growth, rising fuel prices, and persistent government deficits. But the term premium on bonds has risen modestly, pointing to the heightened perceived risk of locking in longer term yields. Global equity markets declined – marginally in the case of the U.S. and emerging markets, and more substantially in advanced economy non-U.S. markets. AI-related stocks bucked the broad downward trend. Crude oil prices soared. The U.S. dollar index posted a strong gain.