Hoping for relief to shift from the Fed to geopolitics
Fed vs. geopolitics.
Group Research - Econs, Philip Wee22 Sep 2026
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The DXY Index rose 0.2% to 100.43 overnight, as Fed officials reinforced the case for further tightening. Fed President Susan Collins (Boston) pencilled in another hike this year, citing persistent inflation and renewed fighting in the Middle East. Austan Goolsbee (Chicago) warned that repeated supply shocks made it harder to wait for inflation to subside. Alberto Musalem (St Louis) favoured early, incremental tightening to avoid more disruptive tightening later. Speaking today, John Williams (New York) will likely stress that further increases will be conditional on data.

The Fed’s renewed inflation resolve may be easing the uncertainty surrounding the Treasury buybacks. Investors may be growing more confident that the timely tightening will reduce the need for harsher action later. US Treasury 10Y yields fell for a third session, with the 10-year down 4.5 bps to 4.95% and the 30-year easing 4.2 bps to 5.28%. Risk appetite also improved: the S&P 500 gained 1.5%, the Nasdaq Composite rose 2.3%, and Bitcoin surged 7.3% to an eight-month high.

However, the Fed cannot restore disrupted energy supplies. Attention now turns to this week’s United Nations General Assembly, where world leaders are expected to press for de-escalation in the Middle East. The reopening of the Strait of Hormuz and progress towards a ceasefire in the Russia-Ukraine war. US President Donald Trump is scheduled to address the assembly today, followed by Iranian President Masoud Pezeshkian tomorrow. Looking beyond the tough rhetoric, markets will be watching for signs that both sides will step back and open the door for negotiations. Brent crude fell for a fourth day, dropping 3.4% to $100.34 a barrel after Trump signalled he was open to meeting Pezeshkian. The counterargument is that a return to diplomacy would reduce the risk of further monetary tightening and support risk appetite, reversing the USD’s gains.

Quote of the Day
“We must accept finite disappointment but never lose infinite hope.”
     Martin Luther King, Jr.

Today in history
The Plaza Accord was a September 22, 1985, agreement by G-5 nations (US, Japan, West Germany, France, UK) at the Plaza Hotel in New York City to jointly depreciate the USD.







Philip Wee

Senior FX Strategist - G3 & Asia
philipwee@dbs.com

 

 
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