This report reviews developments in September and October 2026. The dominant themes were surging energy-driven inflation, a sharp global bond selloff, and growing weakness in AI-related equities. Rising oil prices and tighter financing conditions have increased the likelihood of further interest rate hikes on both sides of the Atlantic.
In the US, payroll growth slowed sharply, with only 29,000 jobs added in September, and unemployment rose to 4.2%. Inflation accelerated to 3.7%, with gasoline prices up 9.1% in the month. Traders now see a 54% chance of a Fed rate hike at the 27–28 October meeting, and odds of a hike before year-end exceed 96%.
Euro area inflation rose to 3.8%, up from 3.2% in August. ECB President Christine Lagarde warned that financing conditions have tightened and that higher long-term rates will slow growth. The ECB has raised rates twice in the last four months, and a further hike is expected in December.
Equity markets weakened. The S&P 500 is down 0.6% over four weeks after setting a record high on 6 October, as AI stocks pulled back and US bank shares continued to underperform. In Europe, France’s CAC 40 fell 4.3% on political instability and surging bond yields, while Germany’s DAX fell 1.7%.
Oil prices rose about 11% in four weeks, with Brent near $108 and US crude near $104. Ukrainian strikes on Russian oil facilities and further tanker attacks in the Persian Gulf clouded the supply outlook. Gold fell 5.2% to around $4,150 per ounce, and Bitcoin fell 4.9% to around $82,200.
Bond yields moved higher. The US 10-year Treasury yield reached 5.10%, and the French 10-year yield surged 48 basis points to 4.95%. In Cyprus, inflation held at 5.2%, and the 10-year government bond yield rose to 4.05%, widening its spread over German Bunds to 64 basis points.
The full report, with charts, detailed analysis, and asset-class breakdowns, is available exclusively on the LifeGoals Members Platform. You can also listen to a detailed discussion on our exclusive Market Update Podcast on Apple Podcasts.