MARKETS IN A NUTSHELL — FOR SEPTEMBER 2026

US President Donald Trump wants America to have the world’s lowest interest rates. However, in September his chosen Federal Reserve chairman raised them. Concurrently, US government bonds suffered their worst month in four years after borrowing costs surged. Thirty-year Treasury yields reached their highest level since 2002, while Treasury Secretary Scott Bessent’s efforts to push those costs down have come to little. Investors increasingly want more compensation for financing US debt.

America’s war with Iran is dragging on. Brent crude rose by double digits last month as restrictions on shipping through the Strait of Hormuz are exhausting global inventories. With Russian production impaired, diesel prices have reached record highs and airlines are facing shortages of jet fuel. Even an agreement to reopen the strait would take time to bring relief. Meanwhile, higher transport costs are already working their way into other prices.

America’s economy nevertheless remains surprisingly strong, although jobs growth has slowed. Spending on AI infrastructure is supporting growth and corporate earnings, giving the Fed less reason to overlook inflation. Its unanimous rate increase was the first since 2023. Central banks elsewhere, including Japan’s, also tightened. Softer US inflation data towards month-end have reduced expectations of another immediate rate hike, but offer scant comfort to US borrowers whose mortgage rates follow long-term bond yields. Mortgage rates there have now surpassed 7%, making American homes even less affordable.

US shares weathered the month remarkably well, with the S&P 500 slipping only marginally. Enthusiasm for AI continues to support technology shares, even as the cost of financing the promised expansion rises. But UK, eurozone and Chinese shares lost more than 4% in dollars. Several postponed share listings suggest investors are becoming more selective, even as US indices remain near records. Anthropic’s much-anticipated listing, postponed to November, will provide a fresh test of investor appetite for AI.

In South Africa, the JSE fell nearly 6% in rand and more so in dollars, given rand weakness. Resources stocks fared worst, after precious metals prices fell on higher interest rates. Domestic bonds held steady and local listed property stocks edged higher. The SA Reserve Bank raised rates — despite a contraction in second-quarter economic output — as services inflation and the prolonged fuel shock threaten the bank’s new inflation target.

Given the environment, all the Foord funds outside of the fixed income suite fell in the month. The low weighting to the frothiest sectors of the US market and sentiment-driven selloff in Chinese consumer and consumer-tech names weighed on the Foord global funds. The South African Foord Equity Fund was more resilient than most peers, but nevertheless also retraced in September.

Looking ahead, much of the debt raised when money was cheap has yet to be refinanced. As it falls due, higher interest bills will squeeze company profits and government budgets. AI spending is helping the US economy withstand higher rates. The next test is whether the returns on that investment justify its rising cost.