The Weekly Bull/Bear Recap (Sept. 25, 2026)

The MSCI All-Country World Index (ACWI), a global measure of equities, was on pace for an advance. The U.S. and Emerging Markets rose while International Developed Markets fell. The 10-year Treasury yield scaled new heights, hitting its highest level since mid-2007. The U.S. dollar strengthened overall.

Below is a concise summary of major macro and geopolitical events that influenced sentiment this week.

Bullish Developments

• Early on in the week, chip stocks surged while numerous U.S. technology indexes hit records. One factor underpinning investor optimism was the release of a new artificial intelligence (AI) assistant by Meta. Economic data also helped. A purchasing managers’ index (PMI), which tracks business trends, indicated the fastest pace of growth in activity in over five years, supported by increases in new orders. Jobless claims notably fell.
• A PMI capturing business activity in the euro area also hit a multi-year high, boosted by unexpected strength in the services sector as well as activity in Germany and France. For Germany, defense spending and AI have been drivers, raising optimism and triggering more upgrades to economic forecasts. Improved growth prospects, in turn, look to sustain a commitment by Italy to reduce its deficit next year below an important threshold indicating prudent fiscal management.
• Despite volatile energy prices from geopolitical conflicts, the OECD, an organization of like-minded countries for economic development and trade, boosted its global growth forecast by 0.1% to 2.9%. Mentioned mitigants to the headwinds included diversified oil supply (non-OPEC) and government support measures shielding populations. AI has also contributed to growth, seen in a fresh record high for Taiwan’s benchmark Taiex stock index and a strong preliminary report on exports out of South Korea.
• In China, biopharma stocks rose on the potential for better ties with the U.S. to fuel more deals for drug products between both countries. Alibaba unveiled a powerful AI chip designed to compete with U.S. technology peers.
• The U.S. clinched a deal with Denmark over its role in Greenland, ending a recurring irritant in U.S.-Europe relations. In another sign of stabilized ties, the U.S. and China agreed to extend their trade truce until early next year. Both have also agreed to maintain dialogue to address challenges brought by AI.

Bearish Developments

• A global bond selloff mid-week undercut investor optimism earlier on. Influencing yields in Japan was doubt over how monetary policy would cope with rising inflation. In the U.K., fiscal uncertainty was an additional concern. Another factor overall was rising oil prices.
• In the U.S., benchmark sovereign yields hit multi-decade highs. Over five Federal Reserve officials voiced their expectations for higher interest rates. This development added support for the U.S. dollar versus many major foreign currencies.
• While developments simmered down late in the week, the overall tenor of the Middle East conflict worsened. The Iran-backed Houthis staged an attack on Riyadh, Saudi Arabia’s capital, and claimed to have damaged oil facilities in the nation, signals that the conflict may be spreading throughout the region. This possibility was further supported by a warning from Iran that it could strike targets in the Indian Ocean in response to efforts by the U.S. to ground Iranian airlines. Iran’s president also vowed no surrender to U.S. force in a speech at the United Nations General Assembly.
• Other geopolitically-related developments included a warning from the Bank of Canada of a potential economic slowdown tied to trade conflict with the U.S. Separately, as attention remains focused on the Middle East, events in the South China Sea may signal an attempt by China to alter the status quo.
• In Europe, German regional elections further reduced the political capital of Chancellor Friedrich Merz. Elsewhere, higher diesel prices have prompted calls from France, which saw its credit rating downgraded, for various support measures from the EU. A report on euro area bank lending to businesses continued to signal weakness, which may be linked to tighter monetary policy. Meanwhile, the region’s top supplier, the U.S., has raised uncertainty over the prospect of an diesel fuel export ban. In the U.K., higher interest rates are dampening consumer confidence while the British pound fell to its lowest level versus the U.S. dollar in nearly three months.

On Watch

• It’s All About Diesel: Higher diesel prices, caused by the Middle East and the Russia/Ukraine wars, are spurring politically vulnerable Republicans to call for an export ban, a measure President Trump has recently endorsed. One may score a tactical political win for the administration, as the midterm elections approach, while helping improve the domestic consumption outlook. However, this may come at the expense of major international customers, such as Europe, dealing the U.S. reputational damage as a reliable provider of global energy.
• The Middle East’s Mixed Messages: Forecasting geopolitics is very difficult, as events can turn on a dime. While the week began with escalation in the Middle East war, it is ending with renewed hope of a deal to reopen the Strait of Hormuz in seven days after an agreement is reached. With financial markets extremely sensitive to these developments, more signals of a deal could lead to a further rally for risk assets. Yet this may depend on the willingness of the U.S. to agree to Iranian demands for a guaranteed cessation of hostilities and permanent control of the Strait of Hormuz, a red line the U.S. has refused to negotiate on.
• Growth from Stability?: While not producing breakthroughs, the Trump-Xi summit has underpinned stability. We note the short-term nature of the extension of the Busan Agreement, the temporary trade truce between the U.S. and China, reflecting an undercurrent of tensions. From the South China Sea to reports of the Houthis leverage of Chinese goods, there remain plenty of factors that can upset the fragile détente.

Concluding: Despite continued geopolitical turmoil, the rise in the ACWI suggests optimism over AI and general economic resilience remain strongly supportive of investor sentiment. This bolsters our view of the global economy as a pressure cooker, ready to release positive energy (rising stock markets) upon steps toward the resolution of the Middle East war. However, we remain vigilant of the challenges inflation may pose, especially to regions such as Europe and Asia, which are more sensitive to energy prices.