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September 14, 2026
Good afternoon,
Markets
For the week ending 9/11/2026:
- The S&P 500 decreased 0.8% to close at 7,656.98.
- The yield of the 10-year Treasury bond increased from 4.78% to 4.98%.
- Oil increased from $91.48 to $100.05.
- The CBOE Volatility Index (VIX) increased from 14.53 to 15.84.
- U.S. dollar currency exchange rates were:
- EUR/USD: 1.16 (USD stronger from a week ago)
- GBP/USD: 1.35 (USD stronger from a week ago)
- USD/JPY: 154.48 (USD weaker from a week ago)
Market Headlines
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Oil Resurgence: U.S. crude traded above $100 per barrel for the first time in nearly four months as oil prices surged more than 8% last week, marking their largest weekly gain since July. Prices jumped as military confrontations between the U.S. and Iran escalated, following U.S. Navy strikes on Iranian crude oil tankers and subsequent retaliatory missile and drone attacks by Iran and allied regional militias. Adding to supply concerns, the International Energy Agency (IEA) warned that global oil supplies are declining much more sharply than previously anticipated. The combination of escalating geopolitical tensions and tightening supply pushed fuel prices significantly higher, with the U.S. national average price for diesel rising above $6 per gallon for the first time in history.
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Sticky Inflation: Friday’s Consumer Price Index (CPI) report showed that inflation remains stubbornly high, rising 0.4% month-over-month and holding steady at 3.4% year-over-year. While inflation has been driven primarily by the spike in energy prices following the U.S. conflict with Iran, Core CPI, which excludes food and energy prices, rose 0.3% month-over-month, coming in slightly above economists’ expectations. The persistence of core inflation prompted traders to increase the odds of a 25-basis-point interest rate hike at the Federal Reserve’s upcoming meeting.
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Bond Sell-Off: U.S. Treasury yields experienced a sharp sell-off last week, pushing borrowing costs to multi-year highs. The rout was fueled by a combination of persistent inflation concerns, surging oil prices, and a smaller-than-expected government bond buyback operation, which further weakened demand for Treasuries. The 10-year Treasury yield closed at 4.97% on Friday, its highest level since October 2023, after briefly rising above 5% intraday for the first time since 2007. Meanwhile, the 30-year Treasury yield reached 5.35%, near its highest level in nearly two decades, as investors demanded higher yields to compensate for elevated inflation and increased uncertainty surrounding the long-term fiscal outlook.
Key Takeaway
As the Fed prepares for its meeting this week, investors are preparing for the first interest rate hike since July 2023. Interest-rate futures are currently pricing in roughly an 85%–90% probability of a 25-basis-point increase, which would move the federal funds target range to 3.75%–4.00%. The shift in expectations has been driven primarily by persistent inflation pressures, stronger-than-expected recent inflation data, particularly core inflation, and a resurgence in oil prices, which have remained elevated throughout much of this year and could keep inflation pressures elevated for longer. The market is also responding to an increasingly hawkish tone from Fed Chair Kevin Warsh, who has emphasized that the central bank still has work to do to bring inflation back toward its 2% target. With inflation remaining above target and economic activity showing resilience, investors increasingly expect the Fed to prioritize price stability over supporting lower borrowing costs. The bigger question for markets may be whether this represents a one-time adjustment or the beginning of a broader tightening cycle, as futures markets are already pricing in the possibility of additional rate increases into 2027. Investors will be closely watching Warsh’s post-meeting commentary for clues about the path of interest rates through the remainder of 2026 and into 2027.
The Week Ahead: September 14 – 18
- Monday: No major reports scheduled
- Tuesday: No major reports scheduled
- Wednesday: FOMC interest rate decision, Retail sales, Export and import prices, Housing market index
- Thursday: Initial jobless claims, Housing starts, Pending home sales
- Friday: Leading economic index, Industrial production and capacity utilization
Until next week,
Weller Financial Group
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