德勤 -全球经济每周动态 Weekly Global Economic Update 20260915

WEEKLYGLOBALECONOMICUPDATE•PG1

WeeklyGlobalEconomicUpdate

What’shappeningthisweekineconomics?Deloitte’steamofeconomistsexaminesnewsandtrendsfromaroundtheworld.

ByIraKalish

Article•7-minread•15September2026

WeekofSeptember14,2026

·

USinflationsteadies;investorsgetanxious

·

Oilpricesandbondyieldscontinuetodominatefinancial

markets

·

Chineseexportscontinuetoboom

USinflationsteadies;investorsgetanxious

·WhenitcomestothetrajectoryofUSinflation,itismostlyaboutenergyprices:Thelatestconsumerpriceindex(CPI)

datafromtheUSgovernmentshowsthatenergyprices

reboundedinAugust,keepingheadlineinflationatan

elevatedlevel.Thereactionwassharpfromthefinancial

market,withariseinbondyieldsandanincreaseinthe

futuresmarket’simpliedprobabilitythattheUSFederal

Reservewilltightenmonetarypolicynextweek.Let’slookatthedetails:

Thegovernment

reported

that,inAugust,theCPIwasup

3.4%fromayearearlier,whichwasthesamelevelasJuly.Theannualrateofinflationhasexceeded3.3%everymonthsincetheMiddleEastconflictbegan—alevelnotexceeded

sinceApril2024.Inaddition,thegovernmentreportedthattheCPIwasup0.3%fromJulytoAugust—thehighestsinceApril.

Energyplayedabigroleinthis:Energypriceswereup

16.3%inAugustversusayearearlier,andupby2.1%fromthepreviousmonth.Gasolinepriceswereup27.4%fromayearearlierandup3.9%fromthepreviousmonth.Finally,thepriceoffueloil(usedtoheatbuildings)wasup52%

fromayearearlierandup10.1%fromthepreviousmonth.Plus,theaverageretail

price

ofdieselhitarecordhighonthedayofwriting.Allofthisreflectsthesharpriseintheprice

ofcrudeoilandthecontinuingglobalshortageofrefinerycapacity.

Whenvolatilefoodandenergypricesareexcluded,core

priceswereup2.4%fromayearearlier—downfrom2.5%inJulyandthelowestsinceMarch2021.Corepriceswereup0.3%fromthepreviousmonth—thehighestsinceApril.Althoughannualcoreinflationhasdecelerated,themonth-to-monthincreasecouldindicatepotentialacceleration.Itwilldependonwhathappenswithoverallinflationandthedegreetowhichenergy-priceinflationspillsoverintonon-energygoodsandservices.Andthisishappeningtosome

extent:Forexample,airlinesfares(whichareinfluencedbythecostofjetfuel)areup23.4%fromayearearlier.

Thenewsoninflation,combinedwithlastweek’srelativelystrongjobsreportaswellasnewsabouteventsintheMiddleEast,appearstohavereinforcedinvestorconcernsthatthereishigherinflationtocome.That,inturn,coincidedwitha

furtherriseintheyieldontheUSTreasury’s10-yearbond.Atthetimeofwriting,ithit4.96%—thehighestinthree

years.Moreover,investorexpectationsaboutFedpolicy

shiftedaccordingly.The

futures

market’simpliedprobabilitythattheFedwillhikethebenchmarkinterestratewhenit

meetsnextweekincreasedfrom72.4%yesterdayto86.5%

WEEKLYGLOBALECONOMICUPDATE•PG2

today.Plus,theimpliedprobabilityofatleastoneratehikebeforetheendoftheyearincreasedfrom94.4%yesterdayto97.5%today.

ThesenumbershaveledmarketparticipantstoquestionhowtheFedcouldpossiblynotraisethebenchmarkinterestratenextweek.Afterall,ifitdoesn’t,marketswilllikelyreact

negatively,expectingevenhigherinflation.Yet,thereisnowplentyofmarket

commentary

aboutwhetherFedChair

Warshwillbewillingtoraiserates.IfWarshvotesnotto

raiserates,thecommitteemightdefyhim;butthishasrarelyhappenedbefore.SuchamovecouldbeviewedasreducinghisauthorityattheFederalReserve.Ifhevotestoraiserates,hewillpossiblyfacecriticismfromtheadministration,as

well,whichfavorsacutinthebenchmarkinterestrate.

Eitherway,nextweekmayprovetobeadifficulttimeforhim.

Oilpricesandbondyields

continuetodominatefinancial

markets

·Aroundtheworld,bondyieldscontinuedtoriselastweek,amidelevatedinflationexpectations,which,inturn,are

relatedtoeventsintheMiddleEast.Thelatestevents

comprisedaseriesofattacksbyYemeniHouthisagainst

SaudiArabia.TheHouthiscontrolmuchofYemenandarealignedwithandsupportedbyIran.

ManyanalystsviewtheHouthiactionagainstSaudiArabiaasaproxywarbetweenIranandtheSaudis—oneinwhichSaudiArabia’soilinfrastructureishighlyvulnerable.One

resultoftheattacks,whichincludedactionagainstSaudioil-productionfacilities,isthatSaudicrude-oilproductionhasfallentoitslowestlevelthisyear.That,inturn,isoneofthereasonswhythepriceofBrentcrudehitUS$107perbarrellatelastweek—thehighestsinceMayandupbymorethanUS$20perbarrelsincelateAugust.

The

yield

ontheUSTreasury’s10-yearbondhit4.96%lastweek—thehighestinthreeyears.Thiswaspartofaglobaltrend.IntheUnitedKingdom,theyieldonthe10-yearbondhit5.38%—thehighestsince2007.And,inGermany,the

10-yearbondyieldhit3.5%—thehighestsince2011andup

65basispointssinceJuly.

Thesharpriseinglobalbondyields,whichhastakenplacesteadilyoverthelasttwomonths,isnowtheprimefocusoffinancialmarketobservers.Thatisbecauseithasa

significantimpactoncredit-marketactivityandonthefiscalstanceofmajorgovernments.Avigorousdebateisunderway

abouttheprimarycausesoftherise.Amongthepossiblecausesareelevatedinflationexpectations,expectationsofmonetarypolicytightening,increasedbondsalesbytechcompanies,andgrowinganxietyabouttheunsustainablefiscalstancesofmajorgovernments.

Meanwhile,theriseinbondyieldshasaffectedthepricesofotherassets.IntheUnitedStates,theinterestrateona30-yearfixed-ratemortgagepassed7%lastweek,whichcouldpotentiallyhaveafurthernegativeimpactonhousing-

marketactivity.Indeed,USsalesofexistinghomeshave

fallen

ineachofthelastthreemonths.Otherborrowing

costsarerisingcommensurately,raisingconcernsaboutthecostofcreditforbusinesses,especiallytechcompaniesthathaveissuedalotofdebt.

Theriseinbondyieldsisrelatedtoconcernsaboutinflation,stemmingfromtheriseinoilprices.However,itisnotonlyoilpricesthathaverisen.Thecommodityprice

index

,

publishedbytheCommodityResearchBureau,isnowup40%sinceFebruary.Thisreflectstheriseinoilandgas

pricesaswellaspricesofotherimportantcommodities.

Inaddition,itmightalsoreflectthedownwardpressureonthevalueoftheUSdollar.Theriseincommoditypriceshasshownupinsignificantlyhigherpricesfordieselandjetfuelaswellasthecostofsemiconductorsandotherimportant

components.Overall,thiscouldcontributetoinflationarypressuresandapotentialreductioninthepurchasingpowerofbothconsumersandbusinesses.

Inthepastsixmonths,thephysicalshortageofcrudeoilwaspartlyoffsetbythereleaseofcrudereservesbymajor

countries,especiallyChina.However,itis

reported

that

investorsarebeginningtoworrythatthosereserveswillsoonbedepleted,inwhichcase,theshortagecouldonlybe

resolvedbyasharpincreaseinpricethatwouldsuppress

demandandreduceittothelevelofsupply.Ifthathappens,globalinflationcouldacceleratefurther,likelyleadingto

tightermonetarypolicyaroundtheworld.

Meanwhile,theUSTreasurycontinuestopurchaselong-

datedbondsinthehopethatthiswillsuppressbondyields.USTreasurySecretaryBessent

said

thatcurrentyieldsdonotreflectmarketfundamentals.Thus,thegoalistoconvince

investorsthatthemarketisnoton“aone-waytrip.”Thatis,heseesthemarketasbeingdrivenbyfearratherthan

fundamentalsandistryingtoshiftthefocus.However,the

upwardmovementofbondyieldsrecently,bothinthe

UnitedStatesandelsewhere,likelyreflectsinvestorconcernsthatinflationriskisrisingand,consequently,theriskof

tightermonetarypolicyisrising.Assuch,bondyieldsappeartorespondtowhatishappeninginthelargereconomy.

WEEKLYGLOBALECONOMICUPDATE•PG3

Also,itisworthnotingthat,althoughtheyieldontheUS

10-yearbondisapproaching5%,thisisalevelthatwas

considered

normalnotlongago.Afterall,justpriortothe

startoftheglobalfinancialcrisisin2008,theyieldwas

about5%.Moreover,forallofthetimefromthelate1960suntil2000,theyieldwasabove5%,sometimesmuchhigher.Itwasonlyintheperiodbetweentheglobalfinancialcrisisandthepandemicthattheyieldwasconsistentlymuch

lower.Thus,someanalystshavesuggestedthatweare

returningtonormalcyandthatthereisnoneedforpanic.Thiswouldbeespeciallytrueifthemassiveinvestmentinartificialintelligencebooststheaveragegrowthrateoftheeconomy.

Finally,theeventsintheMiddleEasthavecontributedtoasignificantshortageofliquifiednaturalgas(LNG),with

considerableimpactobservedinEurope.ThelasttimetherewasamajorLNGshortage(intheearlydaysoftheRussia-Ukrainewar),Europeangovernmentstookstepstostockpilegasforthecoldwintermonths.

Thistimeisdifferent,however.The

amount

ofgasinstorageinEuropeisnowatthelowestlevelin15years.Gastanks

arenowabout67%full—down13percentagepointsfromayearago.Why?ItisreportedthatEuropeanbuyersexpectedthattheStraitofHormuzwouldbeopenedbynow.Butit

remainsclosedandgasisnotflowing.

Ontheotherhand,EuropeanofficialssaythatEuropehasbeensuccessfulindiversifyingsourcesofgas,and

diversifyingenergyproductionawayfromgas.Ifso,lowerinventoriesmaynotnecessarilybeaproblem.

Chineseexportscontinuetoboom

·China’sexportstotherestoftheworldcontinuedtogrow

veryrapidlyinAugust.Importsgrewstronglyaswell,but

importsaremuchsmallerthanexports.Thus,thetrade

surplusgrew.GiventhemassivesizeofChina’seconomic

footprintintheworld,continuedlargesurplusescouldprovechallengingforsometradingpartnerstoabsorb.

Asitis,Chinacontinuestohaveexcesscapacity,andsomeothercountrieshaveaccusedChinaofsubsidizingexportsandsellingthematpricesbelowcost.Indeed,manyChineseindustrialcompaniesare

not

profitable.Thereisgrowing

backlashinmanycountriesagainstChina’saggressiveexporting,especiallyinEurope,wheretheautomotiveindustrynowfacesincreasingcompetitivepressure.

Meanwhile,inEuropeandNorthAmerica,thereisconcernaboutthedominantpositionthatChinamaintainsinseveralkeyinputsformanufacturersofautomobilesandhigh-techequipment.ThishasgivenChinaleverageinnegotiations

withtheUnitedStateswhenitcomestotraderestrictions.Indeed,latelast

year

,someautomotivefactoriesinNorthAmericahadtotemporarilyshutdownbecauseChina

withheldexportsofsemiconductorsmadebyNexperia,whichareusedinairbagsandbrakingsystems.

ChinaonlyrelentedaftertheUnitedStatesagreedto

postponetheimplementationofanewexport-control

regime.Chinanowaccountsfor30%ofglobalindustrialoutput—anumberthatisexpectedtoriseinthecomingyears.

ThecounterparttoChina’stradesurplusisamassive

outflowofcapital,reflectingChina’sexcesssavingsrelativetoinvestment.Italsoreflectssuppresseddomesticdemand,afactthatChina’sgovernmentacknowledgesbuthassofar

failedtoadequatelyaddressthroughrestructuringorstimulus.Thus,Chinacontinuestorelyonexportsforeconomicgrowthratherthandomesticconsumption.

Theoutflowofcapitalisthecounterparttotherestofthe

world’stradedeficit.Chinaisinvestingmassivelyinmultiplecountries,includingadvancedeconomiesinEuropeandAsiaaswellasemergingeconomiesaroundtheworld.Theriskisthat,ifChina’sexportboomendsandthesurplus

diminishes,theflowofcapitalfromChinatoemergingcountriescouldslowsignificantly.

Plus,China’sinputandcommodityimportsfromemergingcountriescouldweakenaswell.Thus,althoughitwouldbeintheinterestofChinaandtherestoftheworldtounwindthelargesurplus,theprocessofdoingsocouldbehugely

disruptivetotheglobaleconomy.

Interestingly,untilaboutadecadeago,muchofChina’s

surpluswasinvestedinUSTreasurysecurities.However,

startinginabout2015,ChinareduceditsexposuretoUS

bonds.Othercountriesfollowedsuit.The

result

isthattheshareofUSTreasurysecuritiesheldbyforeigngovernmentsfellfromabout35%in2015toabout12%today.This

meansthat,fortheUnitedStatestocontinuerunninglargebudgetdeficits,itmustfindbuyersforitsbondsinthe

privatesector.

Inanyevent,let’slookatthelatestnumbers:InAugust,

Chinese

exports

(denominatedinUSdollars)wereup25%fromayearearlier—thethirdconsecutivemonthinwhichexportsgrewbymorethan24%.ProductsthatsupportthebuildoutofAIaccountedforhalfofthegrowthinexports.

WEEKLYGLOBALECONOMICUPDATE•PG4

Specifically,exportsofintegratedcircuitswereupalmost

130%fromayearearlier.Exportsofhigh-technology

equipmentwereup57%fromayearearlier.Ontheother

hand,vehicleexportsweredown.Thus,China’sexport

performanceappearstobeincreasinglylinkedtothesurgeinAIinvestment.

Infact,thepatternofChina’sexportgrowthbycountrymayalsoreflecttheinfluenceofAI-relatedinvestment.ConsidertheUnitedStates:Whenitfirstintroducedhightariffslast

year,ChineseexportstotheUnitedStatesfellsharplyfor

manymonths.Thatisnolongerthecase.InAugust,ChineseexportstotheUnitedStateswereup34.4%fromayear

earlier.Notably,exportstotheEuropeanUnionwereup

only6.6%—theslowestratein10months.Thisisnot

surprisinggiventhatEuropeisnotasbigaparticipantinAIsupplychainsastheUnitedStates.Meanwhile,Chinese

exportswereup30.2%toSoutheastAsiaandupmorethan40%tobothSouthKoreaandTaiwan.

China’s

imports

grew28.2%inAugustversusayearearlier.Thiswasroughlyinlinewiththepaceofimportgrowthoverthelastfivemonths.Thestrengthofimportswasalso

stronglyrelatedtothebuildoutofAI.Forexample,importswereup108.1%fromSouthKorea,up41.5%fromTaiwan,up20%fromJapan,andup35%fromSoutheastAsia.In

addition,importswereup17.8%fromtheUnitedStatesbutuponly0.7%fromtheEuropeanUnion.Theremarkable

growthofimportsfromSouthKorealikelyreflectthat

country’sstrongpositionasanexporterofAI-relatedchips.

WeekofSeptember7,2026

·

Thesurgeinbondyieldsistheprincipalfocusoffinancial

markets

·

USjobmarketshowsstrength,influencesinvestorsentiment

·

Refinedenergyproductpricesremainelevatedcomparedto

crudeoil

Thesurgeinbondyieldsistheprincipalfocusoffinancial

markets

·Theriseinbondyieldscontinuedlastweek,withtheyieldontheUSTreasury’s10-yearbondhittingathree-yearhighof

4.82%beforeretreatingto4.75%laterintheweek,after

newcommentsfromaFederalReservegovernor(discussedinlatersections).

Priortothis,theyieldhadnotbeenhighersince2023.

Meanwhile,theyieldonthe30-yearbondhitthehighest

levelsince2007.Todate,theUSTreasury’seffortto

influencelong-termyieldsthroughmarketinterventionhasnothadasustainedimpact,whichsuggeststhatinterventionwithoutchangesinmarketfundamentalsmaysometimes

haveunintendedmarketreactions.

Itmightconvincesometradersthatthingsareworsethan

expected.ThelatestincidentintheStraitofHormuzappearstohavereinforcedconcernsthatthecrisiscouldpersist,

potentiallyleadingtohigherinflation.Futuresmarketsnow

show

animplied68%probabilitythattheFedwillraisethebenchmarkinterestrateinSeptember.

IntheUnitedKingdom,the

yield

onthe10-yeargilthit

5.2%—thehighestsinceJune2008—likelyreflectingaviewthatinflationwillaccelerate.Moreover,futuresmarketsarenowpricingina70%probabilitythattheBankofEnglandwillhikethebenchmarkinterestrateinNovember.With

memoriesofthetenureofLizTrusshangingovernewPrimeMinisterAndyBurnham,theChancelloroftheExchequer

JohnHealeywillpresentabudgetinOctober.Thenew

governmentmustnavigateadifficult

path

,attemptingtoappeasebondinvestorswhilepleasingvoterswithfavoredspendingprograms.

Ifbondinvestorsinterpretthebudgetasnotaddressingfiscalissues,bondyieldscouldrisesharply.Thegovernment

cannotaffordsuchanoutcome,givenBritain’sborrowingcostsalreadyexceedthoseoftheUnitedStates,Germany,andFrance.

Meanwhile,in

Germany

,theyieldonthe10-yearbondhit

3.36%—thehighestsinceApril2011.TheyieldinFrancehitthehighestsince2008,andyieldsinItalyandSpainhittheirhighestlevelsinthreeyears.Investorsgenerallyexpectthe

EuropeanCentralBanktoraiseitsbenchmarkratein

September.Futuresmarketsnowshowan80%probabilityofanotherratehikeinDecember.

InJapan,theyieldonthe10-yeargovernmentbondbrieflysurpassed3%forthefirsttimeinthreedecades.Whilethelatestsurgemaypartiallyreflectthepotentialinflationary

impactofeventsintheMiddleEast,tradersarealsofocusedonJapanesefiscalpolicyaswellasinterestdifferentialswiththeUnitedStates.YieldsalsoincreasedinotherEastAsiancountries.

WEEKLYGLOBALECONOMICUPDATE•PG5

Allofthisraisesanimportantquestion:Arehigheryieldsabadthing?And,asinmanyotheraspectsoflife,theansweris:Itdepends.

Bondyieldsgenerallymovetobringsupplyanddemandforloanablefundsintobalance.Ifdemandforfundingrisesin

relationtosupply,yieldswilloftentendtorise,andvice

versa.Iftheperformanceofaneconomyimproves,leading

togreaterprofitableinvestmentopportunities,the

equilibriumyieldcouldrise,whichwouldnotnecessarilybeabadthing.If,however,demandforfundsrisesrelativeto

supplybecauseofalackoffiscalprobity,yieldsmayrise,

potentiallystiflingprivatesectorcreditactivity.Or,if

expectationsofinflationriseandinvestorsrequireprotectionfromtheriskofinflation,yieldsmayalsoriseandthatwon’tbeagoodthing.

Considertheperiodbetweentheglobalfinancialcrisis(2008to2010)andtheCOVID-19pandemic(2020to2021):Thisperiodwascharacterizedbyhistoricallylowinflationand

historicallylowbondyields.Someeconomistssuggested

that,inpart,thelowyieldsreflectedanexcesssupplyof

savingsintheworldrelativetoinvestmentopportunities.Itmighthavebeenrelatedtoweaknessinaggregatedemandintheglobaleconomy.

Now,fastforwardtothecurrentsituation:Wehavehigherexpectationsofinflation,whichmaypartlyexplaintheriseinyields.Andwehavehistoricallylargebudgetdeficitsin

severalmajorcountries,whichmayalsoexplainsuchhighbondyields.Butwealsohaveanew,revolutionary

technologythathasledtomassivegrowthininvestment.Ithasledtoexpectationsofstrongproductivitygrowthand

potentiallyfastereconomicgrowth.These,too,mightpartlyexplaintheriseinbondyields.Inthatsense,higherbond

yieldscouldbeseenasreflectingabettereconomicpicture.

Indeed,yieldsthataretoolowcanleadtopoorcapital

allocation.Ifyieldsareclosertozero,thereiseffectivelynoopportunitycostassociatedwithmakingbadinvestments.Ahighyieldcanhaveadiscipliningeffectoncapitalmarkets,likelydirectingcapitaltowardthemostpotentiallyprofitableusecases.

ConsiderthecaseofJapanwhich,untilrecently,hadyieldsnearorbelowzero.Italsohadaprolongedperiodof

suboptimalgrowth.Yetnow,theyieldonthegovernment’s10-yearbondisaround3%—thehighestsincethemid-

1990s.Some

analysts

suggestthatthisisasignofeconomichealth,andcouldmeanthatthecountryhasmanyfavorableinvestmentopportunities,andthatJapancouldsoonreturntoasustainedhigherrateofgrowth.

Ontheotherhand,Japanfaceshigher-than-desiredinflation.Inaddition,itfacesapotentiallydisruptivelevelof

governmentdebt.Thesefactorspartlyexplainhigheryields.AndJapaneseyieldshavesuddenlyrisensharply,whichwasprobablynotjustduetoasuddenimprovementineconomicprospects.Assuch,itremainsunclearwhetherJapan’s

economyiscapableofsupportingthe3%yield.Inanyevent,attheveryleast,thehighyieldswilllikelymeanthatcapitalwillonlyflowtothebestopportunities.

Onefactorthathaslatelycontributedtohigheryieldsistheriseinenergyprices.Lastweek,thepriceofBrentcrude

wentashighasUS$97perbarrelbeforesomewhat

retreating.Justaweekearlier,thepricewasunderUS$88perbarrel.Thesharpriseappearstoberelatedinparttothe

conflictbetweenIranandtheUnitedStates.Duringthe

week,therehasbeenareturntohostilitiesbetweenthetwocountries.Moreover,theredoesnotappeartobeany

movementtowardaresolution,either.Ifhigherpricesaresustained,theycouldaddtoinflationarypressuresaroundtheworld.

Meanwhile,thepriceofEuropeannatural

gas

hasincreasedsharply—hittingthehighestlevelsinceearly2023.Injustthepastmonth,thepricehasrisenroughly40%.About20%ofgloballytradedliquifiednaturalgastravelsthroughtheStraitofHormuz,mostlycomingfromQatar,andmuchofitgoestoEurope.Thisroutehasbeendisrupted.Plus,thewinter

seasonisapproachingwhileEuropeangasreservesareatalevelbelownormal.Thelatestinflationdatafromthe

EuropeanUnionshowedacceleration,therebyboostingthelikelihoodoffurthertighteningofmonetarypolicybythecentralbank.

Finally,asmentionedabove,USyieldstemporarilyfelllastweekafterFederalReserveGovernorChristopherWaller

spokeaboutthefuturetrajectoryofmonetarypolicy.

Specifically,Waller

said

thathe“wouldbeinclinedto

supportholdingthetargetforthefederalfundsrateatits

currentsetting.”Hesaidthathisdecisionattheupcomingmeetingthismonthwillbedeterminedbydata.Specifically,hesaidthat“ifthereiscontinuedprogresstowardour2%goal,thenIamwillingtosupportholdingthepolicyrateatitscurrentlevel.Butifinflationcomesinhot,Iwould

consideraratehike.”FollowingWaller’scomments,the

futuremarket’simplied

probability

ofaratehikethismonthdroppedfrom63.2%to50.3%.

ThecommentsfromWaller,whichfollowcommentsbyNewYorkFederalReserveBankPresidentJohnWilliams

suggestingthatinflationisbeingtamed,lednotonlytoa

dropinUSbondyieldsbutalsoadeclineinthevalueoftheUSdollar.

WEEKLYGLOBALECONOMICUPDATE•PG6

Theglobalselloffofgovernmentbondsappearstoreflect

multiplerisksintheglobalfinancialsystem.Theseincludeexpectationsofhigherinflation,expectationsoftighter

monetarypolicy,concernaboutfiscalpolicyinmultiple

countries,andconcernaboutthemassiveissuanceofbondsbytechcompanies.

Yet,equityinvestorsappeartobelargelyfocusedonartificialintelligencethanonthoserisks.Theperformanceofequity

priceslikelyreflectstheviewthat,despiteshort-termheadwindsandrisks,massiveinvestmentinAIcouldgeneratesizablepositivereturnsinthenearfuture.

USjobmarketshowsstrength,influencesinvestorsentiment

·IntheUnitedStates,jobsgrowthwasstrongerthanexpectedinAugust,whichledinvestorstoviewtheeconomyas

strongerthanpreviously,potentiallypointingtoward

inflationarypressures.Afterall,stronggrowthcan

sometimescontributetobottlenecksandshortages,therebyboostingprices,whichmayimplyagreaterlikelihoodthattheFederalReservewilltightenmonetarypolicyinthenearfuture.Infact,thefuturesmarket’simplied

probability

ofaratehiketakingplacethismonthincreasedfrom49.4%adaybeforeto58.4%atthetimeofwriting.

Moreover,theprobabilityoftworatehikesthisyearisnow44.1%whilethatofnoratehikesthisyearisonly14.3%.Thus,investorsappeartoseeasignificantlikelihoodof

monetarypolicytighteningthisyear.Meanwhile,theyield

ontheTreasury’s10-yearbondincreasedmodestlytodayontheemploymentnews.Inaddition,theUSdollarrosein

value.Let’slookatthedetails:

TheUSgovernmentreleasesamonthly

report

onthejobs

marketthatincludestheresultsoftwosurveys—asurveyofestablishmentsandasurveyofhouseholds.The

establishmentsurveyfoundthat,inAugust,162,000newjobswerecreated.Thiswasthehighestnumberofjobs

createdsinceMarch,andwasamuchbiggernumberthanmanyanalystsexpected.Moreover,throughout2026,jobgrowthhasbeenrelativelyhealthyafterbeingrelatively

feeblein2025.

Asnoted,investorsgreetedthenewsasevidenceofeconomicstrengthandpotentiallyhigherinflation.PresidentTrump,

however,calledforlowerinterestrates,sayingthatstrongemploymentgrowthmeansthattheUnitedStatesisagoodcreditrisk.Hehasrepeatedlycalledforlowerinterestratesand,asofthetimeofwriting,onceagaincalledontheFed

anditsnewchairtocutrates.Thus,iftheFedchoosestoraisethebenchmarkratethismonth,thenewchaircouldfacecriticismfromtheadministration.

Inanyevent,thestrongjobgrowthwasconcentratedinjustthreecategories:Employmentwasupby28,400in

healthcareandsocialassistance,up67,800in

accommodationandfoodservice,andup50,000inlocalgovernment(mostlyineducation).Combined,thesethreecategoriesaccountedfor90%ofUSjobgrowth.

Meanwhile,therewasmoderatejobgrowthinconstructionandmanufacturing,feeblejobgrowthinretailtrade,

transportation,andprofessionalandbusinessservices,andadeclineinemploymentinfinancialservicesaswellas

information.Thelastcategoryincludescomputing,data

processing,webhosting,andrelatedservices.Thus,thetechindustry,whichisamajorsourceofeconomicgrowth,wasnotasignificantcontributortojobgrowthinthisreport.

Also,theestablishmentsurveyprovidesdataonaverage

hourlyearningsofallprivatesectorworkers,andfoundthat,inAugust,averagehourlyearningswereup3.1%froma

yearearlier—theslowestgrowthsinceMay2021.Weknowthat,inJuly,theconsumerprice

index

wasup3.4%fromayearearlier,whichsuggeststhatwagesarenotkeepingpace