The primary catalyst driving the current surge was yesterday's release of US PMI indicators for September. The data significantly exceeded expectations, reaching five-year highs. The composite index reached 58.4, which is consistent with GDP growth dynamics of around 5%. However, the report also highlighted intensifying cost pressures and an increasing tendency among companies to pass higher costs on to customers.
Figure 1: US PMI Indicators (2023 - 2026)
Source: XTB Research, 24.09.2026
This provides a further argument for continued monetary policy tightening by the Fed. Concerns regarding an overheating economy and the necessity of further rate hikes to contain inflation are increasingly coming to the fore.
Market-implied probability of the rate-hiking cycle continuing as early as October has risen above 70%. The repricing was supported by FOMC policymakers Michael Barr and John Williams. The former stated that further policy adjustment was likely, while the latter noted that a rate increase before the end of the year would be reasonable.
Oil remains an important factor in this context. Brent crude continues its upward trajectory today (+1.6%). The movement in WTI is more modest, yet still noteworthy (+1.2%).
The sell-off was further exacerbated by weak demand for debt evident during Wednesday's 5-year bond auction. The Treasury Department's bond buyback programme also disappointed. Long-term bond purchases capped at a maximum of 6 billion dollars were announced for today, whereas the market had anticipated a significantly larger scale.
Impact on Other Assets
A further rise in yields is placing pressure on the equity market, particularly visible in technology stocks. Futures contracts indicate a decline of nearly 1% for the Nasdaq 100 index in pre-market trading. Pressure on the S&P 500 is somewhat lower (-0.5%).
Precious metals are also weakening, as they serve for many investors as a direct alternative to bonds offering increasingly higher returns.
Figure 2: Gold (2026)
Source: XTB Research, 24.09.2026
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Michał Jóźwiak, Financial Markets Analyst at XTB
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