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September 28, 2026
Good afternoon,
Markets
For the week ending 9/25/2026:
- The S&P 500 increased 1.2% to close at 7,743.41.
- The yield of the 10-year Treasury bond increased from 5.00% to 5.18%.
- Oil decreased from $100.30 to $92.41.
- The CBOE Volatility Index (VIX) increased from 14.81 to 14.87.
- U.S. dollar currency exchange rates were:
- EUR/USD: 1.14 (USD stronger from a week ago)
- GBP/USD: 1.32 (USD stronger from a week ago)
- USD/JPY: 158.81 (USD stronger from a week ago)
Market Headlines
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Yields Hit 20-Year Highs: The recent selloff in the bond market accelerated last week, sending long-term Treasury yields to their highest levels in nearly two decades. The 10-year Treasury yield briefly moved above 5.2% on Friday, its highest level since 2007, before easing back to 5.17% at the close. Persistent inflation concerns, resilient economic growth, and expectations for interest rates to remain elevated for longer have continued to put pressure on longer-term bonds and borrowing costs.
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Oil Prices Ease: Reports that U.S. and Iranian negotiators were exploring a potential deal to reopen the Strait of Hormuz triggered a sharp decline in crude prices last week. Hopes for a broader de-escalation in the Middle East helped ease concerns about global oil supplies, with WTI falling to $92.41 per barrel on Friday, down roughly 8% for the week, while Brent closed at $104.32.
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Fed Remains Hawkish: Following the Fed’s recent interest rate hike, Governor Michael Barr said his “base case” calls for further rate increases as policymakers work to bring inflation back toward the Fed’s 2% target. His comments, combined with stronger economic data, pushed market expectations for another rate hike at the Fed’s October meeting to roughly 65%.
Key Takeaway
As inflation persists and the economy remains resilient, the bond market has continued to face significant pressure. Rising inflation expectations, higher oil prices, and stronger-than-expected economic activity have pushed Treasury yields higher, weighing on bond prices. At the same time, hawkish commentary from several Federal Reserve officials and the Fed’s recent rate hike have reinforced expectations that additional rate increases may be needed if inflation remains elevated. Looking ahead, bonds could remain under pressure through the remainder of 2026 if inflation continues to run above the Fed’s 2% target and economic growth remains solid. The Fed’s latest projections put 2026 PCE inflation at 3.7%, well above its target. Higher-for-longer interest rates, elevated government borrowing, and continued uncertainty surrounding inflation could keep longer-term Treasury yields elevated, which limits the potential for meaningful bond price gains in the near term. However, the higher yields available today also provide investors with more attractive income potential and could create an opportunity for stronger bond returns if inflation eventually cools and interest rates begin to decline.
The Week Ahead: September 28 – October 2
- Monday: No major reports scheduled
- Tuesday: Job openings, Consumer confidence, Home price index
- Wednesday: PCE price index, GDP, ADP employment report, Wholesale inventories
- Thursday: Initial jobless claims, ISM manufacturing index, Construction spending
- Friday: Jobs report, Factory orders
Until next week,
Weller Financial Group
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