Blog week ending, 11th September 2026
Markets:
- Local and global stock markets came under pressure this week as surging government bond yields and rising central bank rate hike bets led investors to question valuations.
- US government bond yields climbed, with the US 10-year yield almost eclipsing the psychological 5% mark, as traders dumped bonds after producer inflation rose and traders’ interest rate bets spiked. Sentiment was also impacted by the US Treasury’s announcement that it would increase its bond buyback program.
- Eurozone investor sentiment improved in September from August, coming in well above forecasts and reaching its highest level since February 2022, marking a fifth straight monthly gain.
- In local stock news, energy stocks like Woodside rose strongly after oil prices hit their highest levels of the year on escalating US-Iran hostilities.
- China’s central bank added 650,000 ounces of gold to its reserves in August, its largest monthly purchase since 2023, extending its buying streak to 22 months.
- The Japanese Yen strengthened to its highest level since February, surpassing the peak reached after the coordinated intervention by Japan and the US.
- Oil prices rose past US$108 a barrel, their highest level since May, as escalating tensions in the Middle East raised fears of prolonged disruptions to global supply.
Economy:
- Australian consumer sentiment plunged 5.2% in September, reversing a 6% rise in the prior month and marking the first decline since June. Higher fuel prices and concerns over further rate hikes weighed on confidence.
- Australian labour market data showed filled jobs rising 2.6% over the year to the end of June, with employed persons up 1.9%, hours worked up 2.4%, and average labour cost per hour worked rising 3.3%. Job vacancies fell in the June quarter, although those holding multiple jobs rose to a record 6.9% of employed people.
- Australian productivity remains subdued, with economic output per hour worked unchanged in the June quarter and falling 0.2% over the year.
- The US economy added 162,000 jobs in August, the most in five months, following an upwardly revised gain of 23,000 in July and well above market expectations of 56,000. The unemployment rate held steady at 4.1%.
- US consumer inflation expectations were unchanged at 3.6% in August, though concerns about the labour market intensified, with expectations for higher unemployment over the next year reaching their highest level since April 2020.
- Private US businesses added 127,000 jobs in August, following an upwardly revised gain of 71,000 in July and well above market expectations of 45,000.
- The European Central Bank raised its key interest rates by 0.25% at its September meeting, marking its second hike since the US-Iran war began. The Bank kept its inflation forecast for this year but lifted its projections for 2027 and 2028.
- The Eurozone economy expanded 1.2% compared with the same period last year in the June quarter, up from 0.6% growth recorded in the March quarter. Stronger household spending and a rebound in exports were the key drivers.
- Germany’s industrial production output dropped 1.1% in July from June, missing expectations for a 0.1% increase and reversing from a downwardly revised stagnation in June. It was the fourth monthly decline this year, driven by a plunge in automotive production.
- Japanese nominal wages rose 4.7% in July from the same period last year, the fastest pace of growth since 1997 and well above the 3.8% expected.
- Japan revised its second-quarter economic growth up to an annualised 1.4% from a preliminary 1.1%, driven by stronger capital expenditure.
- China’s annual inflation accelerated to 0.8% in August from July’s six-month low of 0.5%, in line with market expectations. August’s reading was the highest since February.
- Chinese producer prices rose 3.8% over the year to August, coming in ahead of estimates and July’s 3.5%, supported by higher global commodity costs and demand for high-tech products.
- China’s trade surplus widened to US$119.09 billion in August, up from US$101.01 billion a year earlier and in line with forecasts. Exports jumped 25%, driven by strong demand for semiconductors, technology products, as well as Chinese-made cars. Shipments to the US surged.
Politics:
- Iran and the US exchanged their largest wave of attacks on shipping since the war began. With Iran claiming responsibility for attacks on ten ships, while the US military reporting the destruction of five Iranian oil tankers. The escalation followed reports that US forces struck three Iranian crude tankers on Sunday, after Iran fired ballistic missiles at a US carrier and destroyer.
- President Trump promised a US$5,000 “Trump dividend” to every adult American citizen if the Republicans retain control of both chambers of Congress following the November elections, a proposal that is estimated to cost more than US$1 trillion.
- In a perplexing statement, President Trump also threatened to restrict trade with countries that run a trade surplus against the US unless the US central bank lowered interest rates.
- A Russia/Ukraine peace deal remains elusive for now, despite ongoing diplomatic efforts. A US envoy travelled between Moscow and Kyiv during the week, although key territorial differences remain unresolved.
This information is general advice and does not take account of investors’ objectives, financial situation or needs. Before acting on this general advice, investors should therefore consider the appropriateness of the advice having regard to their objectives, financial situation or needs.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
