Fin-X Weekly Update 21st September 2026
Global equities came under pressure early last week as bond yields rose on elevated energy prices and expectations of rate rises, before a late relief rally offset losses.
The Federal Reserve and Bank of Japan raised interest rates, with several signalling that further increases lie ahead.
Attention turns to high-level diplomatic talks between the US and China this week. Further central bank meetings in Europe, Australian employment data, and the latest global flash PMI surveys are also on the agenda.
Equity markets struggled early last week as bond yields rose on elevated energy prices and expectations of higher interest rates worldwide. Interest-sensitive sectors continued to suffer, although a Wall Street relief rally on Friday followed more market-friendly news from the UK and Japan.
The Brent crude oil price held above US$100 per barrel after the Houthis made territorial gains in Yemen, threatening Saudi oil exports from the Red Sea.
Ahead of the Federal Reserve meeting, the US 10-year Treasury yield reached 5% for the first time in three years.
The US dollar strengthened after the FOMC raised the target range for the federal funds rate by +0.25% to 3.75% - 4.00%. It was the committee's first move since last December, when it lowered rates, and its first increase since July 2023.
The updated Summary of Economic Projections indicated that members expect to raise rates once more this cycle. Markets had largely priced in last week's move following the August CPI print and recent Fed communication. Futures prices, however, now reflect at least three further increases by the end of next year, clearly at odds with the committee.
In the UK, consumer price inflation rose from +2.9% yoy to +3.1% yoy in August, the first reading above +3% since March, though in line with consensus expectations. Producer price inflation was considerably stronger at +3.7% yoy. The Bank of England kept rates on hold at 3.75% on Thursday, as widely anticipated, and remains on course to raise at its next meeting in November. Nevertheless, the Monetary Policy Committee offered some relief to the gilt market by pausing its balance sheet reduction until April and ceasing all sales of long-dated bonds.
The Bank of Japan also raised its policy rate by +0.25% to 1.25%, its highest level since 1995 and just three months after its previous increase.
Despite the accelerated pace of tightening, the yen weakened, the 10-year Japanese government bond yield slipped, and the Nikkei 225 gained on Friday. Analysts pointed to two dissenting votes and the absence of updated economic forecasts, as well as a slight undershoot in August CPI, which held at +1.9% yoy rather than ticking higher.
In Australia, RBA Governor Michele Bullock delivered a distinctly hawkish message to Parliament on Friday, outlining several upside risks to inflation that is already too high. Her comments were the latest in a series from the central bank's representatives preparing Australians for the prospect of a cash rate increase as early as the end of this month. This Thursday's August unemployment rate is expected to hold at 4.5% and, in any event, is unlikely to distract the Board from its concerns over prices.
The People's Bank of China left interest rates unchanged over the weekend after the latest activity data showed once again that the domestic economy continues to languish. Retail sales growth slowed to just +0.4% yoy in August, missing economists' forecasts, and the urban survey-based unemployment rate ticked up to 5.3% from 5.2% in July. Urban fixed-asset investment contracted -7.2% over the first eight months of the year, a steeper decline than the -6.7% recorded for January to July. Industrial output, however, expanded +5.2% yoy last month, accelerating from +4.5% in July, consistent with the strong external trade data.
In company news, Warren Buffett announced that he will step down as chairman of Berkshire Hathaway, the company he built over 60 years from a faltering textile manufacturer into a US$1tn conglomerate. His son Howard, 71, will take over as chairman. The 96-year-old cited his age as the main reason for the transition. “Serving as your chairman has been the privilege of a lifetime, and I have never taken your trust for granted,” Buffett said in a letter to shareholders. “Father Time always wins. He has, however, been generous with me. He has given me the opportunity to see Berkshire reach a point where I am more confident than ever about what lies ahead.”
Over his 60 year tenure, Berkshire Hathway's share price grew at an average annual rate of 19.8%, compared to the S&P500's 10.5%.
Buffett previously stepped down as chief executive in May 2025, handing over to Greg Abel, the company's vice-chairman. He will remain as chairman emeritus and a director on the board.
In the latest AI safety scare, Google revealed that its Gemini artificial intelligence model inadvertently hacked into three company systems in May during cybersecurity testing. The incidents occurred during tests run by AI security vendor Irregular, which also led to breaches at OpenAI, Anthropic and Meta Platforms. According to Heather Adkins, vice president of security engineering at Google, the breaches highlight the importance of training powerful AI models to act responsibly.
In geopolitical news, Canada took a step closer to becoming the EU's first “associate member”, a move Prime Minister Anthony Albanese would not rule out for Australia. President Trump, however, warned that Canada's move could be considered a “hostile act” by Washington, with the two countries locked in a worsening trade war.
More positively, the President announced that the US had agreed to a deal with Denmark over Greenland's security, which is expected to be signed soon.
This week, the President is scheduled to welcome his Chinese counterpart, Xi Jinping, to the US for a round of bilateral talks.
The United Nations will also open the debate of its 81st General Assembly in New York.
With public holidays in Japan and China, investors are, however, likely to focus on the latest S&P Global flash PMI releases and central bank meetings in Switzerland, Norway and Sweden. Markets are pricing a roughly even chance of a Norwegian rate increase to 4.5%.
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