Monthly Review - September 2026
In brief
The markets
-0.5%
-4.4%
-2.4%
-2.4%
-4.0%
-2.7%
-2.0%
-3.9%
-1.1%
Source: Bloomberg 30.09.2026, returns in local currency
Top stories
Bond markets still jittery
Government bond markets remained under pressure. The yield on the benchmark US 10-year Treasury bond bounced above 5%, as prices fell. Bond yields move inversely to bond prices. Bond market concerns include spiralling government deficits and the massive borrowing demands for artificial intelligence investment. The oil price jumped back above US$100 per barrel, further fuelling inflation expectations and leading markets to anticipate another round of rate hikes. Nonetheless, equity markets remained buoyant, on hopes for strong earnings growth, and the Nasdaq index hit a record high.
Rates on the rise
Interest rate hikes by the US Federal Reserve, the European Central Bank and the Bank of Japan, formed a synchronised wave of tighter monetary policy. Their actions come in response to global price pressures pushing inflation above target. While supply constraints are squeezing commodity prices higher, demand remains strong. In the US economy, for example, economic indicators recorded the strongest growth in activity for five years. Thei chair of the Fed stressed his commitment to price stability, even as US diesel prices topped US$6 per gallon for the first time. Fed futures markets gave an almost 70% probability of another Fed hike in October.
Mixed messages on AI
US AI leaders joined a chorus of warnings over the potential dangers posed by the pace of development of this new technology. Global AI stocks slipped on concerns over the risks outlined, after AI agents appeared to become ever more autonomous. Jensen Huang, the chief executive of AI chipmaker Nvidia, accused tech bosses of fear mongering, while the US administration pushed for its national champions to maintain their lead over rivals in China. Meanwhile the boss of Huawei Technologies encouraged Chinese AI labs to accelerate their development and the AI race continued unabated.
AI power demands drive nuclear research
While economic and environmental concerns have slowed nuclear power development globally, China is now positioning itself at the forefront of the industry. Surging power demand from energy-intensive AI data centres is accelerating this trend. Indeed more than half of the nuclear plants currently under construction worldwide are in China. Beijing is also investing heavily in small modular reactors and in pursuing nuclear fusion, regarded as the holy grail of energy production. Looking beyond the AI boom, nuclear power plays into China's ambitions for energy security, technological leadership and export-focused manufacturing, while also aligning with carbon neutrality goals.
On the radar
The World Band and International Monetary Fund Annual Meetings will take place, against a challenging macroeconomic backdrop. Geopolitical tensions, upside inflationary pressures and the risk of a sovereign debt crisis will likely dominate the agenda.
After the European Union invited Canada to become the bloc's first associate member, the EU-Canada Summit in Montreal at the end of October will shine a light on how economic ties could deepen, potentially further antagonising the White House.
Following the recent escalation in hostilities, the Ukranian president appears ready to engage in trilateral talks. All eyes will be on the UAE, where Russia, Ukraine and the US will engage in discussions seeking a path towards an end to the conflict.