Blog week ending, 11th September 2026
Markets:
- Local and global stocks were flat to slightly softer this week after A.I. safety concerns were raised and Middle East tensions escalated, while the US Fed raised rates.
- US 10-year government bond yields climbed above 5% this week, reaching their highest level since July 2007, as the global bond selloff intensified amid surging energy prices, mounting inflation risks and growing fiscal concerns.
- In local stock news, mining stocks weighed heavily on the market after calls for A.I. safety guardrails dented copper prices. The share price of both BHP and Rio Tinto fell.
- Financials also weighed heavily on the market as expectations grew that the RBA would lift interest rates this month, while high oil prices and inflation expectations pushed Australian government bond yields higher.
- Energy shares were boosted by rising crude oil prices during the week, with no end in sight to the broadening Middle East conflict.
Economy:
- The US Federal Reserve unanimously raised interest rates by 0.25% to 3.75-4.00% as expected, marking the first hike since 2023 and noting that inflation was too high. The Fed lifted its projections for economic growth in 2026 and 2027 and for inflation this year.
- The annual inflation rate in the US steadied at 3.4% in August, the same as in July and in line with forecasts. Gasoline prices rose strongly, while inflation eased for both shelter and food. On a monthly basis, inflation rose 0.4% in August, the most in three months.
- US retail sales increased 1.2% in August, the most in five months, following a revised 0.5% fall in July. Forecasts were for a 0.8% gain in August.
- US consumer sentiment fell in early September, down for a second consecutive month and well below market expectations. It was the weakest reading since May’s record low.
- Eurozone annual inflation accelerated to 3.2% in August, matching May’s two-and-a-half year high but coming in slightly below the preliminary estimate. The rate remains well above the ECB’s target.
- The Bank of England voted 6-3 to keep interest rates unchanged at 3.75%, in line with market expectations. Three members preferred an increase.
- The UK economy expanded 0.4% in July, picking up from the 0.3% in June and beating expectations of stagnation. July’s growth marked the strongest expansion since February, with services, production and construction all rising.
- A key German indicator of economic sentiment rose in September to its highest level since February but fell short of market expectations. The reading points to cautious optimism about the recovery of Europe’s largest economy.
- Japan’s August producer prices rose 7.6% year-on-year, above expectations, supporting the case for the Bank of Japan to keep raising rates.
- Japan’s exports rose 19.3% year-on-year in August, surpassing market expectations. Outbound shipments grew for the 12th consecutive month, lifted by robust demand for A.I. related chips.
- New Chinese loans rose by just 60 billion Yuan in August, far below the 400 billion expected, while outstanding loan growth slowed to its weakest pace on record, with household borrowing contracting for a sixth straight month.
- Chinese retail sales rose 0.4% in August from the same period last year, slowing from a 0.6% gain in July and falling short of market expectations. Automobile sales continued to decline, with retail sales up 2.5% excluding automobiles.
- Chinese August industrial output rose 5.2% year-on-year, accelerating from 4.5% in July, while urban fixed-asset investment fell 7.2% in the first eight months of the year, widening from a 6.7% decline through July.
Politics:
- The A.I. safety debate came to a head this week, with the biggest players wanting to slow the development of their cutting-edge models to prevent A.I. from slipping beyond human control. US President Trump downplayed the risks, while China also pushed back against what it called A.I. fearmongering.
- Saudi Arabia shut its East-West crude oil pipeline as a precaution after multiple drone attacks, removing the country’s main alternative export route while the Strait of Hormuz remains shut.
- US President Trump called on Ukrainian President Zelenskyy to halt strikes on Russian oil refineries and diesel infrastructure, saying the attacks were causing a global shortage after US diesel prices passed US$6 a gallon.
- Chinese President Xi used the BRICS conference to push for broader local currency settlements, an open-source BRICS A.I. region and tighter supply chain links.
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
