28 September – 2 October 🗓️
🌍 Macro
Markets started the week with the same three forces dominating the previous one: oil, inflation and higher-for-longer interest rates.
On Monday, the lack of progress in U.S.-Iran negotiations pushed oil higher and stocks lower, while Treasury yields continued climbing. Brent briefly moved above $107, while the 10-year Treasury yield reached its highest level since 2007.
The tone improved on Wednesday after U.S. inflation data came in softer than expected. August PCE inflation rose 0.3% month-on-month and 3.4% year-on-year, below economists’ expectations, reducing pressure for another immediate Fed hike.
Then came Friday’s major catalyst: the September jobs report.
📈 Equities
Equities had a volatile week as investors balanced AI optimism against rising borrowing costs.
Technology stocks remained relatively resilient, with AI-related names continuing to attract demand.
Rising Treasury yields repeatedly pressured stocks, particularly during the first half of the week. On Thursday, the S&P 500 recovered after the bond selloff briefly pushed the market toward a two-week low.
Friday’s weaker jobs report provided another boost to equities as traders reduced expectations for an October Fed hike.
💵 Bonds & FX
Bonds were arguably the biggest story of the week.
The 10-year Treasury yield reached around 5.34%, its highest level in roughly 24 years, while long-duration government bonds continued their historic selloff. September ended as one of the worst months for global bonds in years.
The dollar remained strong, supported by high U.S. yields and comparatively resilient U.S. economic data.
Friday changed the short-term picture: weaker employment data pushed yields lower and reduced expectations for another immediate Fed hike.
🛢️ Commodities
Oil remained a major source of inflation risk.
Brent climbed above $107 early in the week as uncertainty surrounding the U.S.-Iran conflict and the Strait of Hormuz continued to threaten global energy supply.
Gold initially suffered heavily from the combination of higher yields and a stronger dollar, falling around 4% on Monday to a more than seven-week low. It recovered somewhat later in the week but remained under pressure from elevated real yields.
By Friday, weaker U.S. jobs data helped both bonds and gold as rate-hike expectations retreated.
💡 The big takeaway
This week was all about the battle between economic strength and rising borrowing costs.
The bigger picture remains complicated. The U.S. economy is still showing resilience, AI investment remains powerful, and equities continue to attract capital, but 5%+ Treasury yields and elevated energy prices are becoming increasingly difficult for markets to ignore.
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