Global Markets Overview: September 2026

Global financial markets experienced notable shifts in August 2026, driven by central bank and government policy announcements, changing energy dynamics, and corporate profits.

Government bonds

Government bonds saw material changes in pricing during August, with government bond yields rising to near multi-year highs in most major markets. The increase in U.S. bond yields accelerated late in the month following stronger, anti-inflation policy statements from the Federal Reserve. The U.S. dollar weakened slightly over the course of the month against a broad basket of currencies. Global stocks broadly advanced and are up materially year-to-date.

The Jackson Hole Economic Policy Symposium

The annual Jackson Hole conference in the U.S. allowed Fed Chair, Kevin Warsh, to give a much clearer explanation of how he views the U.S. economy and what could happen to interest rates. His main message was that the U.S. economy is growing strongly. Business investment is exceptionally high, company profits are healthy, consumers continue to spend, and unemployment remains low at around 4.1%. However, Warsh emphasised that inflation has not slowed sufficiently and reaffirmed the Fed's 2% target. His comments increased expectations of further policy rate tightening, putting upward pressure on shorter-dated bond yields.

12-month outlook

Our 12-month outlook remains for continued strength in U.S. growth and inflation remaining somewhat above target. A small number of additional U.S. interest rate increases may be required if core inflation remains close to 3%. Importantly, this is unlikely to threaten the current expansion in economic and business activity. After the recent rise in U.S. government bond yields, U.S. bonds are now better reflecting this outlook. Higher starting yields have improved prospective returns, although inflation and policy uncertainty continue to favour careful bond selection across markets and maturities.