TMGM Daily Market Breakfast: 17 September 2026

Morning Snapshot

• The Federal Reserve raised the federal funds target range by 25 basis points to 3.75%–4.00%, its first increase since 2023, and signalled a higher rate path through updated projections.
• The Fed’s latest dot plot lifted the median end-2026 rate projection to 4.1% from 3.8%, while policymakers also raised 2026 PCE inflation and GDP forecasts and lowered the unemployment-rate outlook.
• Fed Chair Kevin Warsh said inflation trends were not passing the test, reinforcing a hawkish message after the rate decision.
• U.S. retail sales rose 1.2% month on month in August to $773.9 billion, reversing July’s 0.5% decline and beating expectations for a 0.8% increase.
• U.S. Treasury yields remained elevated around the Fed decision, with the 10-year yield at 5.00% and the 2-year yield at 4.66% in pre-decision trading.
• WTI crude fell back below $100 and traded around $97.50 to $96.60 as Saudi Arabia moved to restore East-West pipeline flows and U.S. crude inventories shrank less than expected.
• Middle East supply risks remained in focus as shipping through the Strait of Hormuz stayed heavily restricted and security concerns persisted around the Red Sea and Bab el-Mandeb Strait.
• Reuters reported that U.S. President Donald Trump is expected to meet Gulf leaders next Tuesday on the sidelines of the UN General Assembly to discuss next steps in the Iran war.
• Gold fell toward $4,250 after the Fed’s rate hike, with spot prices touching a one-month low of $4,235 after an intraday high of $4,366.
• Circle launched the Arc mainnet, an EVM-compatible Layer 1 blockchain for financial markets using USDC, with validators including BlackRock, DTCC, Mastercard, Visa and other major institutions.

Market Developments

Rates & FX

Ahead of the Fed decision, the U.S. 10-year Treasury yield stood at 5.00% and the 2-year yield at 4.66%. After the Fed raised rates, the U.S. Dollar Index advanced toward the 100.00 mark, USD/JPY traded in the 155.50 area and EUR/USD fell toward 1.1460.

Commodities

WTI crude traded around $97.50 after falling roughly 3.3% on the day and later hovered near $96.60, while spot gold dropped to around $4,250 after touching a one-month low of $4,235. Silver traded near $62.68, down 1.56% on the day.

Macroeconomics & Central Banks

Federal Reserve Raises Rates to 3.75%–4.00% and Signals Higher Policy Path

The Federal Reserve raised the federal funds target range by 25 basis points to 3.75%–4.00% in a unanimous 12-0 decision, marking its first rate increase since 2023 and its first move since the cut in December 2025. The decision had been widely anticipated, but the updated policy projections reinforced a firmer stance on inflation and rates.

The latest Summary of Economic Projections showed the median end-2026 policy-rate forecast rising to 4.1% from 3.8% in June. Policymakers also projected a higher 2027 rate path at 4.1%, up from 3.6%. Twelve of 18 officials expected one more 25 basis-point increase this year, four expected two more hikes and two saw no further moves.

The Fed also lifted its 2026 headline PCE inflation projection to 3.7% from 3.6% and its core PCE forecast to 3.4% from 3.3%. At the same time, it raised its 2026 GDP growth forecast to 2.3% from 2.2% and lowered the unemployment-rate projection to 4.1% from 4.3%, indicating that officials still see resilient growth and labour-market conditions alongside persistent price pressures.

Fed Chair Kevin Warsh struck a hawkish tone after the decision, saying inflation trends were not passing the test. His remarks underscored concern that inflation remains too firm to justify a softer policy stance.

The decision came with Treasury yields already elevated. Before the announcement, the 10-year U.S. Treasury yield was at 5.00% and the 2-year yield at 4.66%, while the U.S. Dollar Index extended gains toward 100.00 after the statement and projections.

U.S. Retail Sales Rebound Sharply in August

U.S. retail sales rose 1.2% month on month in August to $773.9 billion, according to the U.S. Census Bureau. The gain reversed July’s 0.5% contraction and exceeded expectations for a 0.8% increase.

On an annual basis, retail sales were up 6.0% in August. The stronger reading added to evidence of continued consumer resilience on the same day the Federal Reserve delivered a rate increase and upgraded its growth outlook.

Bank of Japan Rate-Hike Expectations Stay in Focus After Fed Move

Attention in Asia turned to the Bank of Japan after the Federal Reserve’s rate increase pushed USD/JPY to fresh weekly highs in the 155.50 zone and, in another report, just under 156.50. Markets were pricing a quarter-point Bank of Japan increase to 1.25% at Friday’s meeting with 100% probability.

Even with expectations of a more hawkish Bank of Japan, the yen had been giving back part of its earlier rally as the U.S. dollar strengthened following the Fed’s decision and updated projections.

Energy & Geopolitics

WTI Pulls Back as Saudi Arabia Works to Restore Oil Flows

WTI crude retreated below $100 during the reporting period, trading around $97.50 after falling roughly 3.3% on the day and later hovering near $96.60 in Asian hours. Prices came under pressure as Saudi Arabia stepped up efforts to restore flows through its damaged East-West pipeline and increased crude shipments to Asian refiners through ship-to-ship transfers near Oman’s Sohar port.

Saudi Aramco was reported to be working to restore about half the capacity of the damaged pipeline within days. The market also absorbed U.S. inventory data showing crude stocks shrank less than expected, while another report cited an unexpected build in inventories earlier in the day.

The pullback in oil prices did not remove the broader geopolitical risk premium. Shipping through the Strait of Hormuz remained heavily restricted, while security concerns around the Red Sea and the Bab el-Mandeb Strait continued to cloud supply routes. Reports also highlighted regular Houthi attacks on Saudi Arabia and damage to infrastructure that had forced more flows back through Hormuz.

Trump Expected to Hold Iran Talks With Gulf Leaders Next Week

U.S. President Donald Trump is expected to meet Gulf leaders next Tuesday on the sidelines of the UN General Assembly in New York to discuss the next steps in the Iran war, Reuters reported.

The planned talks come as Middle East tensions continue to shape energy markets and shipping risks across key oil transit routes.

Metals & Digital Assets

Gold and Silver Slide After Hawkish Fed Decision

Gold fell sharply after the Federal Reserve’s rate increase and hawkish guidance, with spot prices trading around $4,250 after touching an intraday high of $4,366 and then falling to a one-month low of $4,235. Another report put gold near $4,265 in early Asian trading as the post-Fed decline extended.

Silver also came under pressure as the stronger U.S. dollar and higher Treasury yields weighed on non-yielding metals. Silver traded around $62.68, down 1.56% on the day.

Circle Launches Arc Mainnet With Major Financial Institutions as Validators

Circle publicly launched the Arc mainnet, an EVM-compatible Layer 1 blockchain designed for financial markets, stablecoin payments and AI-driven economic activity. The network uses Circle’s U.S. dollar-pegged USDC for settlement.

The validator set includes BlackRock, DTCC, Galaxy, Global Payments, ICE, Mastercard, MoneyGram, SBI, Standard Chartered, Sumitomo Corporation and Visa. Circle said the ecosystem is focused on liquidity, payments, access and infrastructure, with day-one integrations including Aave, Aerodrome, Morpho and Uniswap on the DeFi side, and Rin, Thunes and Wirex for payments.

Circle said the Arc testnet, released in late October, recorded more than 500 million transactions across nearly 3 million wallets. The launch comes as the CLARITY Act failed to advance to the Senate floor, delaying the division of regulatory oversight between the SEC and the CFTC. Circle shares closed at $86.30 on Tuesday, down more than 11%, after ARK Invest trimmed its stake by 142,000 shares on Monday.

BlackRock is expected to integrate its BUIDL blockchain, which holds roughly $2.7 billion in tokenized U.S. Treasury funds, on Arc. DTCC is lining up tokenization of DTC-custodied assets for the second half of 2027.