Fed Hikes for the first time in three years as the Bank of England holds and pauses Gilt sales.
This week @ 15:18 Friday 18th September in London.
Markets:
- FTSE 100 was flat, rising 0.13% to 10,664, as Thursday’s 1.2% post Bank of England rally was offset by weakness in banking and energy stocks on Friday.
- S&P 500 was flat, rising 0.16% to 7,670, as heavy losses early in the week gave way to a two-session rebound once the Federal Reserve’s decision was out of the way.
- Nasdaq Composite rose 0.42% to 26,443, led by semiconductors after Nvidia’s chief executive said the company expects to sell roughly twice as many chips next year.
- STOXX Europe 50 fell 0.59% to 5,301, weighed down early in the week by multi-year highs in bond yields and Brent above $107, with only a partial recovery as crude retreated.
Bonds:
- UK 10-year gilt yields rose 3.1bps to 5.31%, having touched 19-year highs mid-week on stronger inflation data before rallying on Thursday when the Bank of England paused its active gilt sales.
- US 10-year Treasury yields rose 2.4bps to 5.00%, after briefly moving above 5% to the highest level since July 2007 as the Federal Reserve signalled further tightening.
Commodities:
- Brent crude rose 0.23% to $104.85, holding above $100 but easing for three consecutive sessions on reports that Saudi Arabia would restore around half of its East-West pipeline capacity within days.
- Gold fell 0.38% to $4,392/oz, as the Federal Reserve’s hawkish rate rise raised the opportunity cost of holding a non-yielding asset.
- Copper rose 1.70% to $6.66/lb, supported by signs of renewed Chinese physical buying, which offset the Fed’s hawkish message.
FX:
- GBP/USD fell 1.16% to 1.33715, its weakest since late July, as the dollar firmed on the Fed’s unanimous rise while the Bank of England’s split hold was read as less hawkish than markets had priced.
- GBP/EUR fell 0.17% to 1.1643, with sterling also softer against the euro after the Bank of England decision.
Macro
- UK CPI rose to 3.1% in August from 2.9% in July, a five-month high, with motor fuels the largest upward contributor. Core CPI was unchanged at 2.6%.
- The Bank of England held Bank Rate at 3.75% by 6 votes to 3, with Greene, Mann and Pill again voting for a rise to 4%. The Committee voted unanimously to reduce its gilt holdings to zero through a multi-year programme averaging £46bn a year to 2034, paused active gilt sales for six months and halted long-dated sales entirely.
- The Federal Reserve raised the federal funds target range by 25bps from 3.75% to 4.00%, its first increase since July 2023, in a unanimous 12 to 0 vote. Updated projections showed 16 of 18 participants expecting at least one further rise this year.
- The Bank of Japan raised its policy rate by 25bps to 1.25%, a 31-year high, in a 7 to 2 vote.
- US retail sales rose 1.2% in August against consensus of 0.8%, the largest monthly gain since March.
- The Strait of Hormuz remained contested, though oil eased after Saudi Arabia moved to repair its East-West pipeline and made additional cargoes available through ship-to-ship transfers outside the strait.
Company news:
- Nvidia rose 2.5% on Thursday after chief executive Jensen Huang said the company expects to sell roughly twice as many chips over the next year, driving a broad semiconductor rally.
- JPMorgan told the Barclays Global Financial Services Conference on Tuesday that third-quarter investment banking fees and markets revenue should rise by a mid to high teens percentage year on year. The shares closed around 0.7% higher, steadying US bank stocks after weaker guidance from Bank of America on Monday.
- LVMH fell around 2.5% on Tuesday alongside the wider luxury sector after Chinese retail sales data missed expectations.
What we will be keeping an eye on next week…
w/c 21st September 2026
- Wednesday 23 September: September flash PMIs for the UK, eurozone and US, the first read on activity since this week’s policy decisions.
- Thursday 24 September: President Trump hosts President Xi at the White House, Xi’s first visit in a decade. Focus will be on whether the tariff truce expiring on 10 November is extended.
- President Trump is also expected to meet Gulf Cooperation Council leaders on the sidelines of the UN General Assembly to discuss next steps in the Iran war.
Enjoy the weekend
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