John Hancock: Weekly Market Recap Week Ended September 11

Weekly Market Recap: Rising Yields, Inflation and the Fed in Focus

Investors faced renewed pressure in the bond market last week as Treasury yields climbed sharply, inflation remained stubborn, and expectations increased for another Federal Reserve interest rate hike.

Treasury Yields Push Higher

Bond yields moved significantly higher to close out the week. The 10-year U.S. Treasury yield reached 4.97%, approaching the closely watched 5% level and marking its highest point since October 2023.

Short- and long-term yields also climbed. The 2-year Treasury yield rose to 4.63%, while the 30-year Treasury reached 5.35%.

Higher Treasury yields can affect borrowing costs throughout the economy, from mortgages and business loans to corporate financing. They can also create additional competition for stocks as investors evaluate the potential returns available from fixed-income investments.

Inflation Remains Persistent

Fresh inflation data added to concerns that price pressures may be proving difficult to bring under control.

The Consumer Price Index showed that annual inflation remained at 3.4% in August, unchanged from the previous month and still above the Federal Reserve’s long-term 2% target.

Wholesale inflation also increased during the month, reinforcing concerns that inflationary pressures remain present throughout the economy.

Together, the reports strengthened expectations that the Federal Reserve may need to maintain a restrictive monetary policy stance—or potentially raise rates again—to continue its fight against inflation.

Markets Prepare for the Fed

Expectations for another Federal Reserve rate hike increased considerably following the latest inflation reports.

By Friday, futures markets indicated an 88% probability of a quarter-percentage-point rate increase at the Fed’s September meeting, up from 59% just one week earlier.

The rapid shift in expectations illustrates how closely investors are watching economic data for clues about the Fed’s next move.

A higher-for-longer interest rate environment could continue influencing stock valuations, bond prices, borrowing costs and economic growth in the months ahead.

Higher Rates Continue to Challenge Housing

The housing market is also feeling the effects of elevated borrowing costs.

Existing-home sales fell 2% in August compared with July and were 1.2% lower than a year earlier. Higher mortgage rates continue to create affordability challenges for many potential buyers.

One encouraging development is an increase in the number of homes available for sale. Housing inventory surpassed 1.6 million homes in August for the first time since 2019, giving buyers somewhat more choice even as financing remains expensive.

What Investors Are Watching

The Federal Reserve remains at the center of the market outlook.

Investors will be watching the Fed’s September decision closely for both the direction of interest rates and any indication of how policymakers view inflation, economic growth and future monetary policy.

With Treasury yields near multiyear highs, inflation still above the Fed’s target and borrowing costs weighing on areas such as housing, markets could remain sensitive to economic data and changes in interest-rate expectations.

For long-term investors, periods of changing interest rates are another reminder of the importance of maintaining a diversified strategy built around individual goals, time horizon and risk tolerance.

Source: John Hancock Investment Management, Weekly Market Recap, week ended September 11, 2026.

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