Monday, September 21, 2026
The ten-year Treasury settled at 5 percent on Tuesday, its highest since 2007. On Wednesday it fell, equity futures rose across the board, Brent gave up about 5 percent and gold dropped $35. A rate rise is supposed to make risk more expensive. This one was received as insurance against something worse.
The Federal Open Market Committee raised its target range a quarter point to 3.75 to 4 percent on Wednesday, its first increase since 2023, on a 12-0 vote. The statement says inflation remains elevated and promises the Committee "will deliver price stability." Twelve of eighteen officials expect another increase this year.
Fitch put the trailing twelve-month default rate across 1,300 private credit borrowers at 6.3 percent at the end of August, a record, with 14 default events in the month. Healthcare providers and industrial manufacturers are both running near 10 percent. On Wednesday the Federal Reserve raised the rate almost all of that debt is priced against.
The Federal Reserve decides on Wednesday whether to raise its benchmark rate from 3.50 to 3.75 percent. After Kevin Warsh's Jackson Hole speech, betting on a hike was roughly even. After August's core inflation came in above forecast and oil rose toward $108, futures priced it at about 85 percent on Monday. For households, the effects arrive at very different speeds.
Fed funds futures put the chance of a quarter-point rise at the September meeting at about 59 percent. Three months ago the same market was arguing about the size of a cut. Brent above $100 and the ten-year at its highest close since 2023 are the reason, and an energy shock is the one shock a central bank cannot fix.
Mortgage balances fell by $74bn in the second quarter, to $13.1 trillion. Households do not usually retire debt when the alternative uses of cash pay this well, and the composition of who is paying and who cannot refinance explains more about the housing market than any measure of affordability.
The funds rate has sat at 3.5 to 3.75 percent while the 30-year Treasury reached 5.31 percent last month, its highest in 19 years, and the 10-year went to levels last seen in 2023. A governor says he is inclined to hold. The long end is not arguing with him. It has stopped listening.
The ten-year Treasury reached its highest yield since November 2023 on Wednesday. On the same day Japanese ten-year debt passed 3 percent for the first time in thirty years, German yields hit a fourteen-year high and British yields an eighteen-year one. Four governments with four different problems do not usually move together.
Debt-to-GDP is higher than it was at the end of the Second World War and two percent of Americans call it the country's biggest problem. Sixteen years ago, at a third the size, it was a mass movement. Salience is not a function of size.
Futures markets have spent the summer walking back easing expectations, and portfolio managers are adjusting duration, credit and cash accordingly.