Investment Daily: US stocks fell and Treasury yield curve flattened after the Fed hiked rates
17 September 2026
Key takeaways
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US stocks and Treasuries fell.
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European stocks and government bonds rose.
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Asian stocks mostly rose.
Markets
US stocks fell on Wednesday after the Fed rate decision. The S&P 500 closed 0.4% lower.
The US Treasury yield curve flattened after the Fed raised rates and reiterated its commitment to price stability. 2-year yields rose 8bp to 4.74% and 10-year yields rose 2bp to 5.02%.
European stocks rose on Wednesday amid lower oil prices and bond yields, ahead of the Fed’s rate decision. The Euro Stoxx 50 rose 0.5%. The German DAX gained 0.5% and the French CAC 40 rose 0.6%. In the UK, the FTSE 100 was up 0.3%.
European government bonds rose. 10-year German bund yields fell 3bp to 3.51% and 10-year French bond yields fell 4bp to 4.46%. In the UK, 10-year gilt yields dropped 9bp to 5.30%.
Asian stock markets traded mostly higher on Wednesday, led by gains in tech shares, as oil prices retreated ahead of the Fed policy decision. Korea’s Kospi climbed 1.4%, while Japan’s Nikkei 225 advanced 0.7%. Elsewhere, China’s Shanghai Composite gained 0.7%, and Hong Kong’s Hang Seng added 0.2%. India’s Sensex was up 0.4%.
Crude oil prices fell on Wednesday after recent gains. WTI for October delivery settled 3.2% lower at USD102.4 a barrel.
Key Data Releases and Events
Releases yesterday
The Bank of Japan (BoJ) raised its policy rate by 25bp to 1.00%, as widely expected, and decided to halt the reduction in JGB purchases from April 2027. The BoJ highlighted the risk of underlying CPI inflation deviating upward above 2%.
The Reserve Bank of Australia (RBA) kept its policy rate unchanged at 4.35%, as widely anticipated. Governor Bullock noted upside risks to inflation and did not rule out further tightening.
In China, May activity indicators continued to reflect a two-speed economy. Industrial production showed resilience, up 4.5% YOY, driven mainly by gains in high-tech manufacturing and new energy sectors thanks to robust exports. However, non-tech domestic demand was softer than expected as the property sector remained under pressure. Retail sales fell 0.6% YOY, partly reflecting an unfavourable base effect from last year’s trade-in subsidies. Fixed asset investment contracted by 4.1% YOY in the first five months, despite strong advanced manufacturing investment.
Releases due today (17 September 2026)
The Bank of England should leave policy on hold given the lack of second round price effects. However, the risk of a rate hike by end-2026 is rising.
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