Macro & Market Musings | 9/11/26

Comments based on information available as of 5:15 a.m. CT on September 11, 2026.

Growth: Still Running, But Not On All Cylinders

The economy’s underlying momentum remains impressive. The Atlanta Fed’s GDPNow tracker still puts third-quarter growth at 4.4% annualized, even after being revised down from 4.75% as wholesale trade and existing home sales data came in soft. The housing market is still struggling as buyers sit on the sidelines waiting for mortgage relief that seems nowhere in sight. Meanwhile, import volumes are surging. September is on track to be the busiest month of the year for U.S. ports, up roughly 10% from a year ago, suggesting businesses are still spending and consumers are still consuming. The economy overall is charging ahead, but it’s not firing on all cylinders, especially with the most interest rate sensitive parts struggling the most.

Inflation: Testing the Shock Absorbers

Crude oil is on the rise, again. The “no war, no peace” limbo gave way to attacks, again. US oil production hit a new record high while Saudi Arabia said its production fell to the lowest level since 1990. Consumers and businesses alike are feeling it. The national average gas price sits at $4.15 a gallon and diesel set a record $5.90 over the weekend. Producer prices are increasing at more than 5% while consumer prices are rising more than 3%. That two percentage point gap isn’t sustainable. It shows up somewhere and that somewhere might be profit margins. Margins are a fine shock absorber, but shock absorbers wear out. That’s a bigger problem than it first appears since a lot of the market moves have been supported by fatter margins. Now they might start slimming down.

Policy: They Can Say That At Least They Tried

The Fed meeting on September 15–16 has become one of the most consequential in years, and the market is not waiting quietly. Fed-hike odds jumped to roughly 70% and traders are basically fully pricing a move by October. The 10-year Treasury yield approached 5% intraday, its highest since October 2023, while 30-year yields hit levels last seen in 2007. The European Central Bank hiked rates for the second time since the Iran conflict began, raising its deposit rate to 2.5% and signaling more tightening may be coming as soon as October. That global tightening backdrop makes it harder for the Fed to hold without looking like it is falling behind. The irony is that a rate hike may be less potent against inflation driven by war and AI investment than against the demand-driven variety. The Fed may hike anyway, not because it will solve the problem, but because credibility demands it be seen trying. Symbolism can trump substance, even when it comes to monetary policy.

Looking Ahead: Getting Real About Yields

The 10-year Treasury yield has climbed to roughly 4.85%, its highest level since October 2023. Given oil above $100, you might assume investors are demanding extra yield to compensate for future inflation. Mostly, they are not. A bond yield has two parts: compensation for expected inflation and a “real” yield–the return left over after inflation. This year’s rise has come largely through real yields, while market-based inflation expectations have stayed comparatively anchored. Most textbooks say real yields rise when the growth outlook brightens. There is some of that at work: the economy keeps proving sturdier than feared. But real yields also rise for less cheerful reasons: uncertainty about the path ahead and the sheer volume of debt investors are being asked to absorb. Both are at work. Heavy government and corporate borrowing alongside weaker demand from traditional bond buyers is a structural force at work, pushing up real yields. New corporate bond issuance is running 50% to 100% above last year’s pace, with AI companies alone issuing north of $1.5 trillion. This isn’t just a US story. The UK just sold 30-year debt at its highest auction yield since records began in 1998. Japan’s 10-year yield moved above 3% for the first time in about 30 years. Higher real yields partly reflect confidence in growth, which is the good news. But they also reflect a world where governments and companies are competing for savings, and savers are charging a higher yield. This isn’t just a growth story. It’s a growing debt story.

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