Weekly Market Update (Sep 06, 2026)
HIGHLIGHTS
All eyes are on CPI next week. ECB and BoJ hikes are almost certain. Markets expect long-term rates to stay higher for longer.
- Fed: Fed expectations are mixed, given the dovish comments from Fed Governor Waller and hawkish messages from Fed President Warsh. Strong job data strengthen the case for a Fed rate hike.
- Yen: The Japanese yen rallied by around 3% last week, mainly driven by a policy shift and the increasing likelihood of intervention. Markets expect a faster pace of BoJ rate hikes, and rotation back toward Japanese assets could strengthen the yen.
- EU: Europe remains at the center of risks from the global energy shock. Natural gas prices in the eurozone rose above 70 euro last week.
MARKETS
| Nasdaq | 26,506.99 | +0.40% |
| S&P 500 | 7,718.60 | +0.09% |
| Dow | 53,414.25 | -0.27% |
| 10-Year | 4.78% | +6bps |
| Brent | 96.28 | +9.28% |
| DXY | 99.16 | -0.52% |
*Data as of market close. 5-day change ending on Friday.
VIEW FROM THE STREET
Equity
UBS: The recent backdrop is supportive for risk assets like equities, including monetary tightening, AI investment, stronger growth, employment, and profits. The recent choppiness should be relatively short-term.
Standard Chartered: We suggest buying the September dip, combined with rising bond yields and the pre-midterm election period. Historically, S&P 500 EPS growth of more than 20% is expected in Q3 and Q4.
Fixed Income
Morgan Stanley: Bond investors are concerned about Secretary Bessent’s long-maturity Treasury buyback plan. Price-insensitive buyers, such as the Fed and other central banks, have reduced their holdings. Natural duration buyers, such as pension funds and insurers, have shifted toward higher-risk areas like private credit.
UBS: High-yield credit spreads are likely to widen if the Fed hikes while inflation is negative and growth signals are mixed. Bond selectivity remains key.
Economy
Goldman Sachs: There is a decline in the labor force participation rate. However, when broken down by age group, it mainly reflects worker retirements rather than an increase in discouraged workers.
UBS: A strong dollar and high real interest rates would create headwinds for gold prices in the short term. Gold can be a diversification holding during periods of energy disruption or renewed inflation.