Market Summary - 28 September 2026
The financial markets are currently influenced by ongoing negotiations between the US and Iran, which have not yielded any breakthroughs. This stagnation is causing crude oil prices to rise, intensifying inflation concerns and increasing expectations for further interest rate hikes by the Federal Reserve. Consequently, Treasury yields have surged to their highest levels since 2007, negatively impacting both equities and gold prices.
Debt Market
The yield on US 10-year Treasury bonds has increased, briefly reaching 5.28%, the highest since 2007. The 30-year yield also rose to 5.58%, marking its highest level since 2004. All US Treasuries with maturities exceeding two years are currently trading above 5%. Real yields for 10-year bonds have climbed to 2.9%, reflecting a nearly 100 basis point increase since the beginning of the year, with significant movement occurring in September.
Energy Commodities
Market optimism regarding a swift resolution to US-Iran talks has diminished, with both parties appearing far apart on key issues such as a ceasefire and the reopening of shipping routes. Brent crude oil prices peaked at approximately $101 per barrel but are currently around $98. Positive supply updates from Saudi Arabia, which resumed oil exports via the East-West pipeline, have contributed to a slight retreat in prices. However, the region remains vulnerable to Houthi attacks targeting energy infrastructure.
Stock Market
US stock indices are trading lower, with the Nasdaq 100 down 0.8%, and both the S&P 500 and Dow Jones losing 0.5%. In contrast, European markets are relatively stable, with the German DAX down 0.1% and other major indices remaining close to Friday's closing levels.
Precious Metals
Gold prices continue to decline, falling below $4,140 per troy ounce, marking a 10% drop from local peaks in August. Silver has experienced even steeper losses, down approximately 5% to around $61 per ounce. The appeal of non-yielding precious metals is diminishing as the opportunity cost of holding them increases, compounded by profit-taking from Chinese investors ahead of the Golden Week holiday.
Monetary Policy
The rise in long-term yields is attributed to concerns over government debt and stronger economic growth prospects, alongside expectations of further rate hikes. The Federal Reserve recently raised rates for the first time since 2023 to combat persistent inflation, with markets pricing in a 70% probability of another rate hike in October. Investors are awaiting the release of US PCE inflation data for August, which could influence bond market dynamics.