Economic Update 9-15-2026

On a shortened Labor Day week, economic data included continued rises in both consumer and producer price inflation, driven by August’s spikes in fuel prices. Existing home sales declined, as did consumer sentiment.

Equities fell across the board globally last week, due to geopolitical tensions, resulting inflation, and higher yields. Bonds pulled back to the same spike in interest rates. Commodities were mixed, with another sharp rise in oil prices, and weakness elsewhere.

U.S. stocks fell back for the week, with large cap growth slightly outperforming small caps. A variety of tensions caused markets to trough by mid-week, with the Middle East conflict, attacks on Saudi energy infrastructure, and the Houthis capturing a port city in Yemen, caused oil prices to reach $100. This was in addition to U.S.-Canada tariff battles continuing, strong inflation readings, and higher Treasury yields putting a damper on sentiment. Chances of a Federal Reserve rate hike rose further, following a strong PPI report, with the headline figure surpassing 5%, pointing to continued price pressures the committee may feel compelled to address.

By sector, gains in  energy and communications (mostly Meta) were offset by declines in health care, materials, and utilities, with the latter notoriously sensitive to interest rates. Within tech, Apple’s much anticipated annual event included the debut of an expensive foldable phone, which resulted in a mixed response. There were also unsettling comments from Anthropic that they believed AI had the potential of wiping out humanity; this is interestingly prior to their planned IPO, which could have been part of the sales pitch pointing to their required expertise in keeping that from happening.

Foreign stocks pulled back for the most part last week, in keeping with domestic equities. The ECB raised key rates by 0.25% to 2.50%, as expected, with further hikes expected to end the year. Emerging markets mixed, with gains in South Korea, Turkey, and Brazil, based on different drivers, while declines were strongest in China and India, seen as having higher exposure to Middle East oil prices that have seen pressure again.

Bonds experienced sharp declines as yields rose across the U.S. Treasury curve, in keeping with strong inflation readings and a solidification of expectations of a Fed hike this coming week. Floating rate bank loans suffered the least damage, with few declines, while long-term bonds naturally suffered the worst damage, down upwards of -2%. Treasury Secretary Bessent announced that “I am the house now,” with Treasury buybacks being tripled, focused on the 10- and 20-year spots on the curve. However, the market continued to test its resolve, and the 10-year note reached its highest yield in three years. While fiscal matters are the primary headline story behind higher yields, persistent inflation and stronger growth generally (led by AI infrastructure activity and debt financing demand) remain causes as well.

Commodities were mixed for the week, with sharp gains in energy offset by lower prices for agriculture, and industrial and precious metals. Crude oil prices rose another 9% last week to an even $100/barrel, with intensification of Middle East attacks. As of late, pressure on distillates has become more newsworthy, with diesel reaching an all-time high of $6/gallon in the U.S., especially affecting the transportation industry.

Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.