Global Macro Insights: September 2026

Key Takeaways

• September overview: Most of the market movement during the month was tied to two main factors: a continued stalemate in the Middle East—which caused oil prices to surge and inflation fears to reignite—and the US Federal Reserve’s (Fed’s) September interest-rate hike. The US dollar (USD) strengthened against most currencies in September. Sovereign bond yields rose in the vast majority of countries, with 10-year US Treasury bond yields reaching a nearly two-decade high, and Japanese government bonds hitting a three-decade high. Hard-currency emerging market (EM) bond indexes fell in aggregate. Inflation remains at relatively high levels across a number of countries. While recent inflation outcomes have been mixed, some countries are seeing the effects of higher energy prices, and the latest move in oil (Brent crude is now over US$100/barrel) suggests more pressure to come. Central banks mostly continued to tilt hawkish, and policy rates were raised in a number of developed markets, including the United States, the euro area (EA) and Japan, as well as in some EMs. Global growth data remains relatively resilient despite the geopolitical backdrop.
• Outlook: The outlook remains highly uncertain given the current global backdrop, but we expect some countries to perform significantly better than others. Certain countries (such as energy importers and vulnerable economies) are at greater risk from the global geopolitical situation and higher oil prices, while others are benefiting from integration into the global technology value chain as the artificial intelligence (AI) demand cycle remains robust. We highlight that the latter group includes a number of EMs, particularly in Asia. These factors underscore the importance of analyzing countries based on their idiosyncratic fundamentals. For example, among EMs, while resilience remains a notable broad factor, differing sensitivities and policy require careful country-by-country analysis. The monetary policy outlook is somewhat clouded by the growth and inflation risks stemming from the conflict in the Middle East, though it appears that most countries are now in or heading toward a hiking cycle. The El Niño weather pattern is expected to further complicate the growth and inflation outlook in coming months. Despite the current geopolitical backdrop, our thesis of “global rewiring” remains intact, and we expect global relations to continue shifting and realigning for some time yet.

This month’s Global Macro Insights offers a comprehensive update on regional developments, along with analysis of the key opportunities and challenges shaping the current macroeconomic landscape.