September 2026: Rates Broke Records, Stocks Did Not Notice

Three weekly runs, 7 to 28 September 2026.

Lead

On 24 September the 10 year Treasury yield touched 5.17%, its highest level since June 2007. Three days later the S&P 500 closed out its best week since early August, up 1.2%. Those two facts describe the same eight days, and they should not both be true. A bond market pricing a second Fed hike this year, with odds that jumped from 50.9% to 73% in a single week, is supposed to be a headwind for stocks priced near record highs. It was not one.

That is September’s real story: the market’s two clocks, the one that prices growth and the one that prices the cost of money, stopped agreeing with each other and nobody blinked. Advanced Micro Devices crossed a trillion dollar market capitalization on a 185% yearly gain the same week Federal Reserve Governor Michael Barr called a second hike his base case. Why it matters: valuations across the AI trade assume rates stay contained. What it costs: Japan’s own 10 year bond yield hit its highest level since 1996 on the same day the US Treasury sold off, so this is no longer a single country’s arithmetic.

I write this from Riga, where the euro’s slide to its weakest level in nearly two months this month reads differently than it does from New York. A currency losing ground while its own central bank is still hiking, on top of a hawkish Fed that just added a second increase to its own plans, is not a technical footnote. It is Europe paying for an American decision it had no seat at.

Three regions

The United States carried the month’s contradiction on its own. The Federal Reserve raised its target range a quarter point to 3.75 to 4.00% on 16 September, its first hike in three years, on a unanimous vote. Governor Barr then called a second increase his base case on 23 September, the same day a flash PMI showed input costs rising at their fastest pace since October 2022, and the market implied odds of a 28 October hike jumped from 50.9% to 73% in a week. None of it slowed the tape. AMD crossed a trillion dollars in market value on a 185% yearly gain, the Philadelphia Semiconductor Index rose roughly 3% on the week, and cybersecurity names kept extending a rally that started when an AI safety essay rattled chipmakers three weeks earlier.

Europe absorbed two shocks at once. The ECB raised its deposit rate to 2.50% on 10 September, its second increase this year, and Lagarde flagged upside inflation risks rather than framing the move as one off. Then the Fed’s own hawkish turn outran it: the euro fell to 1.1381 dollars by 24 September, its weakest level in nearly two months, even though the ECB was tightening too. A region that raises rates and still watches its currency weaken is telling you which central bank the market actually believes.

Asia gave the month’s cleanest divergence. The Bank of Japan raised its policy rate to 1.25% on 18 September, the highest since 1995, on a 7 to 2 vote, and the yen weakened anyway after Governor Ueda declined to commit to further hikes. A week later Japan’s 10 year JGB yield hit its highest level since 1996, tracking the US Treasury selloff, while the Nikkei closed at a fresh high on its fifth straight gain the same week the Hang Seng fell on its third straight decline with mainland China, South Korea and Taiwan closed for holidays.

Investor lens

Two voices spent September betting against the same trade from different angles. Michael Burry told X on 14 September that it was self serving for AI executives to call for a slowdown, then told his Substack readers on 22 September that the NASDAQ 100, already historically top heavy, looked set to drag that weight to a new record. The same week, secondary reporting described him adding fresh short positions against Micron, the SOXX semiconductor ETF, Nebius and Palantir, on the view that memory prices will roll over once production catches up with demand. That is a bet against the exact broadening this brief has been tracking since late August: not that the AI trade fails, but that its winners narrow again.

Warren Buffett spent the month on governance rather than positioning. He stepped down as Berkshire Hathaway’s chairman on 18 September after almost six decades in the role, handing the title to his son Howard while Greg Abel continues as chief executive, and said Greg runs the company while Howard will guard its culture. Three days later a Schedule 13D/A amendment showed Berkshire had crossed 10% ownership of Lennar, adding roughly 212 million dollars of stock on the trading days right after the homebuilder’s third quarter profit fell by more than half and it cut guidance, even as Wall Street analysts turned more bearish on the name. A conglomerate does not usually add to a stock the week its own numbers get worse; that is either conviction in the underlying business or a bet that the guidance cut already did the damage the market needed to see.

Counter argument

The obvious case against everything above is that a market shrugging off two hikes and a bond selloff this cleanly is not broadening, it is complacency waiting for a catalyst. The AAII bull bear spread improved to negative 15.4 points from negative 24.5 the week before, even as Fed hike odds and bond yields both moved higher in the same stretch, exactly the kind of gap between sentiment and rates that has preceded sharp corrections before. Investment grade credit spreads sat near the tight end of their range at 79 basis points and high yield spreads sat in the richest decile of their own history at 280 basis points, both signs that credit markets are pricing close to no risk of the stress equity markets should, in theory, be more worried about.

The strongest version of that argument still has to explain AMD’s earnings, not just its stock price. A 185% yearly gain built on a trillion dollar valuation is a bet on real data center demand, and the Philadelphia Semiconductor Index’s broad rally this month came with cybersecurity, memory and equipment names moving together rather than one name pulling the index alone. If credit spreads are wrong about risk, equities have not been told yet. If equities are wrong, the bond market has already been right for three straight weeks and nobody in stocks has acted on it.

Scorecard

The wrong calls this month were both from early August, and both were about timing rather than direction. Two claims made on 24 August both carried a 16 September deadline and both missed: that the Fed’s cautious majority would hold the line into September, and that AI linked valuations would face a correction the Fed would do nothing to cushion. The Fed hiked as the second claim implied it eventually would, just not fast enough to count as right against its own deadline; the correction never arrived by the earlier date either. Getting the direction right and the date wrong is still a miss, and the record above says so twice.

The calls that aged best were the ones with room to run. The 10 August claim that US equity valuations sit near a 150 year extreme, exposed if the Fed does not deliver the cuts markets expected, needed only the Fed’s actual hike on 16 September to be vindicated, no correction required. AI capex momentum lifting risk assets even as valuations stretch cleared its bar the same way, on Nvidia’s 106% revenue growth. Both were patient, structural claims rather than one week trades, and both beat the claims that tried to call an exact date.

Watchlist

Four names sit inside Michael Burry’s own short book this month, Micron, Palantir and AMD among the ten, giving this list a built in test of his thesis against the market’s. Two European names, Rheinmetall and ASML, both report in the last week of October and both speak to whether this year’s two loudest European industrial stories, defense and chip equipment, keep their momentum into the fourth quarter. The four Asian names span the same memory and equipment questions from Seoul and Tokyo, plus one name, Zijin Mining, that has nothing to do with chips at all: it is the closest direct read on the gold buying out of China that has quietly pushed the metal near a record this year.

Prediction

By 28 October 2026 the Federal Reserve raises its target range a second consecutive time, to 4.00 to 4.25%, as Governor Barr's hawkish turn and September's hot flash PMI harden into the committee's consensus rather than stay a minority view.

Scored in the October issue.

Sources

• CNBC, 2026‑09‑23, https://www.cnbc.com/2026/09/23/market‑sees‑next‑fed‑hike‑in‑october‑following‑barr‑comments‑hot‑inflation.html
• Seeking Alpha, 2026‑09‑25, https://seekingalpha.com/article/4949891‑treasury‑yields‑snapshot‑september‑25‑2026
• STL.News, 2026‑09‑26, https://www.stl.news/u‑s‑stocks‑end‑higher‑after‑volatile‑week‑sept‑26/
• CNBC, 2026‑09‑24, https://www.cnbc.com/2026/09/24/japan‑jgb‑bond‑yield‑treasurys.html
• STL.News, 2026‑09‑25, https://www.stl.news/overseas‑markets‑mixed‑sept‑25/
• European Central Bank, 2026‑09‑24, https://www.ecb.europa.eu/stats/eurofxref/eurofxref‑hist‑90d.xml
• Board of Governors of the Federal Reserve System, 2026‑09‑16, https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a.htm
• European Central Bank, 2026‑09‑10, https://www.ecb.europa.eu/press/pr/date/2026/html/ecb.mp260910~314e508016.en.html
• Bank of Japan, 2026‑09‑18, https://www.boj.or.jp/en/mopo/mpmdeci/mpr_2026/k260918a.pdf
• The Daily Caller, 2026‑09‑21, https://dailycaller.com/2026/09/21/amd‑cracks‑1‑trillion‑as‑ai‑frenzy‑sends‑chip‑stocks‑soaring/
• Yahoo Finance, 2026‑09‑24, https://finance.yahoo.com/markets/stocks/articles/berkshire‑stays‑flat‑lennar‑stake‑200046273.html
• CNBC, 2026‑09‑18, https://www.cnbc.com/2026/09/18/buffett‑stepping‑down‑as‑berkshire‑chairman.html
• Michael Burry, X, 2026‑09‑14, https://x.com/michaeljburry/status/2099353025009561826
• Michael Burry, Substack (Cassandra Unchained), 2026‑09‑22, https://michaeljburry.substack.com/p/trading‑post‑september‑22‑2026
• AAII, 2026‑09‑23, https://www.aaii.com/sentimentsurvey/sent_results
• ICE BofA via govspending.org, 2026‑09‑24, https://govspending.org/series/BAMLH0A0HYM2/
• Axios, 2026‑09‑26, https://www.axios.com/2026/09/26/us‑china‑tariffs‑trade‑30‑billion
• Fortune, 2026‑09‑24, https://fortune.com/article/current‑price‑of‑gold‑09‑24‑2026/
• S&P Global, 2026‑09‑23, https://www.spglobal.com/market‑intelligence/en/news‑insights/research/2026/09/us‑flash‑pmi‑signals‑fastest‑growth‑for‑over‑five‑years‑in‑september

The author holds four equity funds: about 46% security and defence, 45% global high dividend, 5% global and 4% technology, as of 16 September 2026.

Journalism source material, not licensed investment advice. Verify all figures against primary sources before publication.