Newsletter — week of September 28, 2026

Market performance

The S&P 500 (the index of the 500 largest U.S. companies) ends the week nearly unchanged, after a down month of September. The index suffered early in the week from a surge in interest rates, before rebounding about 0.7% on Friday after a disappointing jobs report that reassures the market about the Fed’s potential rate hikes.

Market news

Iran: Washington hardens its tone and the G7 taps its oil reserves

Last week, we stressed that no de-escalation was in sight. The past few days confirm that read.

Donald Trump called Iran’s proposal to reopen the Strait of Hormuz in exchange for lifting the U.S. naval blockade « unacceptable. » He also deemed a resumption of strikes « possible » after the November 3 midterm elections.

Washington is sending a third carrier strike group and an amphibious force of 2,000 Marines to the Middle East, with a full deployment expected by November according to the Wall Street Journal. Three ships were also hit on Tuesday by unidentified projectiles in the Strait of Hormuz, according to a British maritime agency.

Oil gained more than $4 on Thursday on the announcement of this military reinforcement. On Friday, the G7 (the group of seven large advanced economies) announced the release of 100 million barrels from its strategic reserves—the emergency stocks that states build up to cope with a shortage. Diesel will be released first over the first 20 days, with the rest spread over four months. U.S. oil fell about 2% that day and ends the week down about 1.5%.

In our view, this release looks more like a bandage than a solution. One hundred million barrels represent about a day of global consumption, spread over four months, and several analysts point out that it isn’t even clear whether this volume adds to the 426 million already promised in March. The choice of diesel is explained by U.S. inventories falling to a record low in mid-September. And diesel fuels trucks, trains, and farm equipment, so its scarcity raises the cost of all freight transport. We also think the political calendar plays a role. Trump’s approval on the economy has just hit a low, and an expensive barrel is a liability before November 3. This could explain both this release of reserves and the postponement of any strikes until after the vote. In this scenario, the risk of a new surge concentrates on November, which reinforces our choice to stay exposed to energy.

Micron: extraordinary results for AI memory

On Wednesday evening, Micron, one of the world’s three big makers of computer memory, reported quarterly revenue of $54.2 billion, up 379% year-over-year, with an 87% gross margin. It is targeting about $61.5 billion for the current quarter, versus $57 billion expected by analysts. The company says most of its 2027 production of HBM memory (the ultra-fast memory built into AI chips) is already sold at significantly higher prices. Still, the stock slipped slightly after the close, with investors worried about rising capital expenditure.

In our view, these results extend the message we noted last week with the success of Muse at Meta: demand for compute and memory shows no sign of slowing.

U.S. rates at their highest since 2002, then a disappointing jobs report

On Thursday, the rate at which the U.S. government borrows for 10 years (the « yield » on government bonds—the higher it goes, the more expensive borrowing becomes) touched 5.34% intraday, its highest level since 2002. In the third quarter alone, it rose about 0.87 percentage point, its largest quarterly increase since 1994. The 30-year mortgage rate now exceeds 7%.

On Friday, the September jobs report surprised to the downside, with only 29,000 jobs created and an unemployment rate of 4.2%. The figures for the two previous months were revised down, August going from 162,000 to 133,000 jobs and July to a loss of 10,000 jobs.

Immediate consequence: according to the CME FedWatch tool, the probability of another Fed (the U.S. central bank) rate hike in October fell to about 14% right after the release, versus 70% at the start of the week.

In our view, this report brings a reprieve, as the S&P 500’s rebound showed, but it doesn’t solve the underlying problem. The rise in long-term rates stems less from a fear of recession than from an imbalance between a gigantic supply of debt (public deficits, financing of AI data centers) and demand that struggles to keep up, all sustained by expensive oil.

As we noted in our monthly report, high rates are a short-term volatility risk, but we already know what the central bank’s reaction will be if rates were to spiral out of control: money creation. This is a topic we cover in more detail in our training report on inflation, but to sum up, money creation is good for the stock market, even if it isn’t good for the economy over the medium and long term.