Qualis Market Update – 7 September 2026

Dramatic headlines have markets, and investors alike, nervous. But what are the real implications for portfolios, and what’s just noise? In this regular market update, we analyse the past fortnight and discern between the two.

The News

Over the last two weeks, a few things have popped up that will have caught some investors’ interest.

John Healey, in his first major speech as UK Chancellor, spoke about how the UK economy is “turning a corner” and put regional growth in his crosshairs. These comments will bring him under greater scrutiny, with an October budget around the corner and growing indebtedness giving the chancellor less room to manoeuvre to stimulate growth.

Borrowing costs haven’t just risen in the UK, they have also done so in major European markets such as France, Germany and Italy. On the continent this has been driven by soaring energy prices – natural gas having gained more than 120% since the start of the Iran war – and growing geopolitical risks. A surprise election victory in one of Germany’s major western states, by an EU-sceptic party, has added further uncertainty to what the country’s next national election could look like. These factors have combined to see government debt yields in Europe climb faster than any other major economies – with German, UK and French debt rising 23.9bps, 24.4bps and 32.3bps respectively.

A major piece of economic news was recent US employment data, a crucial indicator watched by many, and the latest update has shifted the market’s concern back from recession to inflation and interest rates. Non-farm payrolls rose by 162,000 in August, almost three times the 56,000 consensus, while unemployment remained at 4.1%. The two-year Treasury yield rose, the dollar strengthened and the probability of a September Federal Reserve rate rise increased from 52% to 59%. Labour-market weakness is therefore no longer reason enough to hold rates: upcoming inflation data will need to be convincingly benign if the Fed is to avoid tightening in September. However, it’s worth flagging that President Trump has used the recent jobs data to publicly push the Fed to cut rates – this isn’t the first time Trump has been critical of the Fed, but with a new chair it’ll be interesting to see how independent the institution remains.

Market Movements

The global bond sell-off is becoming a test of fiscal credibility. Over the past week, government borrowing costs rose sharply across developed markets: UK 30-year gilt yields reached 5.93%, their highest this century; Japan’s 10-year yield briefly touched 3% for the first time in 30 years; and the US 10-year Treasury approached 4.82%. Higher oil prices triggered the latest move, but the deeper concern is that persistent inflation, heavy government borrowing and deteriorating public finances will force investors to demand greater compensation for holding long-dated debt. The question is whether this is a temporary sell-off or a structural reset.

Oil has reintroduced the threat of stagflation – essentially the mix of stagnating growth and high inflation. Brent crude rose approximately 6.6% over the past week, reaching around $95 a barrel, as renewed US–Iran hostilities disrupted Middle Eastern supply routes. The danger is not simply more expensive energy: higher oil prices simultaneously raise inflation, weaken household spending and make it harder for central banks to support slowing economies. This helps explain why bonds and equities have both come under pressure—and why the Strait of Hormuz has again become one of the most important variables for global markets.

Looking Ahead

Coming up, we have rate decision announcements from the world’s major central banks, starting with the European Central Bank which is widely expected to a deliver a rate hike amid rising energy prices. As ever these are interesting decisions to watch and each central banks’ comments and reasoning behind their decisions gives us a valuable insight into how they’re viewing their respective economies.

Disclaimer

This article does not constitute investment advice or an offer to sell or a solicitation of an offer to buy the products described within. You should consult your financial adviser before making any decisions

Please note that any performance figures are provided for information purposes only and are not to a guide to future returns. The performance of your own investments may deviate due to a number of factors, including product charges, the timing of contributions & withdrawals and portfolio rebalancing.