Week 39: Bond Yields Surge, Summit Ends Quietly: Equities Hold Their Ground

Weekly Summary

Week 39 (21–25 September) was a week defined by a bond market under pressure and equity markets that largely refused to follow it lower. In the prior week, the Federal Reserve delivered a unanimous 25 basis point rate hike (the first since July 2023) lifting the federal funds rate to a target range of 3.75%–4.00%. Chair Warsh stated plainly that "inflation is too high and has been for too long," and the dot plot revealed that 16 of 18 FOMC participants expected at least one additional hike before year-end. Markets entered Week 39 processing those implications.

The processing was uncomfortable in the bond market. The 10-year Treasury yield climbed above 5% and reached 5.228% intraweek (its highest level since 2007) before settling at approximately 5.18% on Friday. The 30-year crossed 5.5% for the first time in 22 years. October rate hike odds climbed to approximately 64–70% by week's end, up from roughly 55–60% entering the week. Yet equities absorbed this with surprising composure. Meta Connect 2026 delivered a broad AI product showcase that lifted the Nasdaq sharply, and the conclusion of the US-China summit, without major surprises, removed a key uncertainty from the calendar. The S&P 500 gained approximately 1.2% on the week, closing Friday at 7,743.41. The Nasdaq added approximately 2.0%, while the Dow advanced a more modest 0.3% after snapping a three-week losing streak. Friday marked the end of Q3 2026.

For the Rivativ model portfolios, the week was positive but the combined portfolio lagged the index. Combined weekly result: +$3,309.18 (+0.80%), versus SPX +1.21%. September month-to-date: combined +0.60% versus SPX +0.75%, a tight race entering the quarter's final day.