Key events:
• Fed raises interest rates after 3 years
• US government bond yields continue to rise
• US midterm elections are approaching
Summary of the current situation:
In September, stocks remain close to new highs, with the US S&P 500 index trading around USD 7,700. This is despite oil rising above USD 100 again, peace being nowhere in sight, the Fed raising interest rates after almost 3 years, and US government bond yields climbing to levels last seen more than 20 years ago.
However, investors do not see these as particularly significant risks and are looking ahead to strong expected growth in corporate earnings driven by artificial intelligence and everything surrounding it.
Next month, however, another very important event awaits us: the US midterm elections, which will take place on November 3. The elections could change the balance of power, which is currently in Republican hands. Republicans control both the presidency and both chambers of Congress, meaning the Senate and the House of Representatives.
However, partly because of record-low support for Donald Trump, Democrats are currently expected to potentially win more seats in both the Senate and the House. This would halt Trump’s legislative efforts, preventing him from further advancing his agenda. However, he could still veto legislation put forward by Democrats. We will see next month what impact this will have.
And how did other assets perform? Gold is experiencing another decline due to rising interest rates and a strengthening dollar, falling below USD 4,200. Gold itself does not generate any income, such as dividends or interest, which is why a rise in the risk-free interest rate is not positive for gold.
Bitcoin continues to rise and has reached USD 87,000. It is gradually moving onto an upward trajectory, and investors are beginning to show renewed interest in it. This is once again happening against a backdrop of rising US government bond yields.
Macroeconomic summary:
Let us now turn to the key macroeconomic indicators, starting with the year-on-year inflation rate in the Czech Republic, which came in at 1.9% for August. It continues to rise due to elevated oil prices, but food prices are declining slightly, pushing inflation down.
At its latest meeting on September 17, 2026, ČNB left interest rates unchanged at 3.75% for the time being. It sees no need for further rate increases; at most, there could be one increase in the coming months, but otherwise interest rates should remain stable.
The year-on-year inflation rate in the US once again came in at 3.4% for August due to persistently high oil prices. No significant easing is expected in the coming months; instead, inflation is likely to remain around the 3% mark.
Partly as a result, the US central bank raised interest rates for the first time in 3 years under the leadership of the new Fed chair, Kevin Warsh. It raised them by a quarter of a percentage point, from 3.75% to 4%. All 12 Fed members voted in favor of the increase, unlike the previous meeting, when there were dissenting votes. Further increases are expected, potentially reaching 4.5% in 2027.
As for year-on-year inflation in Europe, the figure for August came in at
3.2%. There is a clear upward trend, driven by rising energy prices, including fuel, gas, and electricity.
ECB also continues to raise interest rates, currently to 2.65%. In the coming months, it will continue to be forced to raise rates due to rising inflation, and interest rates could reach the 3% mark.
Czech Republic:
The year-on-year inflation rate in the Czech Republic came in at 1.9% for August. It continues to rise due to elevated oil prices, but food prices are declining slightly, pushing inflation down.
At its latest meeting on September 17, 2026, ČNB left interest rates unchanged at 3.75% for the time being. It sees no need for further rate increases; at most, there could be one increase in the coming months, but otherwise interest rates should remain stable.
Among other things, ČNB continues to see inflationary pressures stemming primarily from rising property prices and sustained demand for loans.
Source:www.tradingeconomics.org
However, the continuing rise in Czech government bond yields remains a problem, especially for 5-year bonds, whose yields have climbed above 5%. Just a year ago, they were somewhere around 3.5%.
As a result, the average mortgage interest rate continues to rise and currently stands at 5.51%.
USA:
The year-on-year inflation rate in the US once again came in at 3.4% for August due to persistently high oil prices. No significant easing is expected in the coming months; instead, inflation is likely to remain around the 3% mark.
Partly as a result, the US central bank raised interest rates for the first time in 3 years under the leadership of the new Fed chair, Kevin Warsh. It raised them by a quarter of a percentage point, from 3.75% to 4%.
US interest rate (current forecast)
All 12 Fed members voted in favor of the increase, unlike the previous meeting, when there were dissenting votes. Further increases are expected, potentially reaching 4.5% in 2027.
The S&P 500 index declined slightly by 0.37% during September. It is currently still near new highs, trading at around USD 7,700 to USD 7,800.
Europe:
As for year-on-year inflation in Europe, the figure for August came in at
3.2%. There is a clear upward trend, driven by rising energy prices, including fuel, gas, and electricity.
ECB interest rate – forecast
Source: www.www.tradingeconomics.org
ECB also continues to raise interest rates, currently to 2.65%. In the coming months, it will continue to be forced to raise rates due to rising inflation, and interest rates could reach the 3% mark.
European stock indices are experiencing a modest decline during September; specifically, MSCI Europe, expressed in dollars, fell by 4.56%. The reasons are rising interest rates, a strengthening dollar, and a greater weighting of industrial companies, which are affected by rising energy prices.
