Quarter · Market review
90 days: hopes for supply recovery gave way to higher costs
In June, there were hopes that agreements would help restore energy supply. By September, the picture includes both more expensive oil and another European rate increase. Meanwhile, technology suppliers earned more. The central lesson of this period: strong demand does not solve every problem with delivery, financing and the returns on investment.
Period covered: 2026-06-19 – 2026-09-16Information as of 13 min read
On 15 September, the US ten-year Treasury yield reached 5.00%. A new New York survey showed slower activity growth and greater price pressure. Microsoft raised its future dividend, while Europe’s rate increase takes effect on 16 September.
Energy delivery, borrowing costs and cash left after investment remain the common question. Higher sales do not automatically mean higher profits. The US central bank’s decision is still due this evening; its outcome is unknown in this morning’s review.
Quarter
What happened
The starting point: interest rates had already risen on 17 June
This 90-day period begins on 19 June. Before it began, on 17 June, the European Central Bank’s previously announced interest rate increase took effect. The rate on banks’ overnight deposits rose from 2.00% to 2.25%. These are the initial conditions before the period under review, not a new event within it.
Also on 17 June, the Federal Reserve left the federal funds target range at 3.50–3.75%. It made no change on 29 July. Europe also chose a pause on 23 July. For a business with debt, this meant that energy costs would not be offset by automatically and rapidly falling interest rates.
The starting backdrop: the 18 June agreement had not yet restored shipping
The US–Iran memorandum was presented as a route towards ending hostilities and reopening the Strait of Hormuz. The economic benefit depended on what happened after the signatures: could ships sail safely, would insurance be available, and would oil actually reach buyers?
More reliable deliveries would have reduced importing industries’ need to hold expensive inventories. Hauliers would have found fuel and route planning easier. But the agreement itself was not a statistical record of restored flows. July and August data later required a more cautious assessment of precisely this assumption.
July: the supply recovery was not sustained
The International Energy Agency’s 10 July review described a partial recovery in June flows and ceasefire violations on 7–8 July. Its 12 August report said Persian Gulf oil exports in July, including routes bypassing the strait, averaged 15 million barrels per day. That was 2.1 million, or about 12%, below June.
This comparison describes two monthly averages, not a one-day shipping halt. It showed that June’s hopes had not been enough to deliver a lasting improvement. US military statements on 5 and 8 September about strikes on Iranian tankers were a reminder that delivery security remained unresolved. A particular price move cannot be attributed solely to these statements.
23 July: trade rules and sanctions added to the planning burden
The European Union’s 21st sanctions package against Russia expanded restrictions on energy, financial services and the shadow fleet. For companies, this matters beyond politics: payment, insurance and cargo transport options change. But an announced restriction is not a measured fall in exports of the same size.
On the same day, the Office of the US Trade Representative announced measures concerning 60 economies under Section 301 of the Trade Act. Tariff treatment depended on the product, origin and exemptions. A broad tariff headline was therefore not enough for an importer: the specific supply chain had to be assessed. This legal and logistical burden added conditions that an oil price chart alone cannot show.
Late July and August: the technology transaction had two sides
Demand for technology was visible both in sellers’ revenue and in customers’ investment bills. On 29 July, Microsoft reported capital expenditure, including finance leases, of 41 billion US dollars for the quarter ended 30 June. Cash purchases of property and equipment were 35.8 billion dollars. These amounts must not be added together: the first includes finance leases, while the second shows asset purchases paid for in cash during the quarter.
The company generated 55.4 billion dollars in operating cash flow. Subtracting cash purchases of property and equipment left 19.6 billion dollars. This explains why a rapid pace of construction is not automatically a bad signal: what matters is how much cash the business generates and how much more it needs from outside.
On 26 August, chip designer NVIDIA reported revenue of 96.221 billion dollars for the quarter ended 26 July, up 106% year on year. Operating profit grew 124%. Some customer spending had therefore already become real earnings for the supplier. For customers to earn a return on their investments, however, their new services need demand and must cover equipment, electricity and financing costs.
August and September: growth continued, but costs did not disappear
Economic data showed resilience, not a general halt in growth. The second estimate of US second-quarter gross domestic product showed annualised growth of 1.5%, or about 0.4% quarter on quarter. Euro-area growth was revised to 0.6% quarter on quarter on 7 September. These figures need to be put on the same time basis before comparing the regions.
The US added 162,000 jobs in August; the data were released on 4 September. On 9 September, second-quarter revenue growth in selected US service industries was revised to 3.0% from the previous quarter. This revenue measure has not been adjusted for prices. Rising sales and a greater real volume of services delivered are therefore not the same thing.
9–11 September: the energy question reached monetary policy
On 9 September, the US Energy Information Administration raised its second-half average Brent price forecast to about 90 dollars per barrel. Model inputs were finalised on 3 September. This is a conditional average for a future period, not the oil price on 15 September and not an already measured effect of later military action.
On 10 September, the European Central Bank announced another interest rate increase of 0.25 percentage points. The deposit facility rate rose from 2.25% to 2.50% on 16 September. On 11 September, the US Consumer Price Index showed annual inflation of 3.4% in August, the same as in July. The seasonally adjusted monthly change accelerated from 0.1% to 0.4%. These data are already known and form a new backdrop to the Federal Reserve meeting of 15–16 September.
? How should we read GDP and price indices?
Gross domestic product measures the value of final goods and services produced in an economy. Real growth removes the effect of prices. US quarterly growth is often reported at an annualised rate, as if the same change continued for four quarters. The Consumer Price Index measures a basket of prices weighted by consumption. Its annual and monthly changes have different comparison bases. The Personal Consumption Expenditures Price Index also includes spending made on consumers’ behalf, uses different weights and accounts for changes in the composition of consumption; these two price indices should not be treated as interchangeable.
Mid-September: June’s hopes were not enough to restore supply
The International Energy Agency’s 11 September forecast projected a larger fall in oil supply than in demand this year. This is a forecast, not the final annual result.
Lower demand does not automatically mean cheaper oil. If the volume reaching buyers falls faster, fuel bills can remain high even as the economy slows. This can help an energy producer only if it can deliver its output. For a haulier or an energy-buying factory, the same situation raises costs.
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Quarter
What matters now
15 September: the ten-year US Treasury yield reached 5%
Before the US central bank’s decision on the evening of 16 September, the bond market was already signalling more expensive long-term financing. The ten-year Treasury yield reached 5.00% on 15 September, compared with 4.97% on 14 September and 4.78% on 4 September. The last session’s rise was small, but part of a larger move over several sessions. The two-year yield was 4.67% on 15 September and the thirty-year yield was 5.36%.
A new bond buyer sees a higher yield, while the holder of an older fixed-rate bond may see a lower market price. A company refinancing debt now may face a higher interest bill. For technology and property projects, what matters is not just future revenue, but the cost of waiting for it. These market moves cannot be attributed to a decision that has not yet been announced.
? What does a 5% bond yield mean?
A bond yield relates its price to future payments. These are annual yields for standard maturities calculated by the US Treasury from market quotations. They are not that day’s earnings, the US central bank’s policy rate or a return guaranteed to every investor. A euro-based investor’s result may also change with the dollar exchange rate.
Factories report slower growth in orders, while inputs keep getting dearer
In the New York State manufacturing survey released on 15 September, the general business conditions index fell from 20.6 points in August to 7.6 in September. The prices paid index rose from 58.6 to 63.1. This is a regional warning, not evidence of a contraction across all US manufacturing: activity was still growing, but cost pressure was not easing.
A factory finds it harder to protect profits if material bills rise faster than its ability to raise selling prices. Orders can still help equipment suppliers, while buyers exposed to energy costs and debt face the other side of the trade. The next broader production and sales figures will show whether this regional signal is repeated.
? How should the New York manufacturing survey be read?
The Empire State Manufacturing Survey compares the shares of companies reporting an increase and a decrease in each measure. Zero separates a balance towards growth from a balance towards decline. A prices index of 63.1 points does not mean that prices rose 63.1%. This is not a purchasing managers’ index, for which the usual threshold is 50 points.
A higher dividend does not tell us how much cash remains after expansion
Software and cloud company Microsoft announced on 15 September that its quarterly dividend would rise from $0.91 to $0.98 per share, or about 7.7%. Payment is scheduled for 10 December. This is a future distribution, not income already received. The decision shows that heavy expansion and returning cash to shareholders can coexist, but a dividend alone cannot establish whether investment is paying off.
In the latest annual cash-flow statement, released on 29 July for the year ended 30 June, operating cash flow increased from $136.2 billion to $182.9 billion. Cash additions to property and equipment rose from $64.6 billion to $115.9 billion. They absorbed about 63% of operating cash, compared with 47% a year earlier. The calculated remainder after those outlays fell from $71.6 billion to $67.0 billion.
These investments are not all artificial-intelligence spending and exclude non-cash finance-lease additions. The remainder is not net income or cash reserved exclusively for dividends. The opportunity for investors is new capacity turning into profitable services; the risk is revenue arriving slowly when equipment and electricity already have to be paid for. Operating cash, actual investment payments and lease commitments matter next, not revenue growth alone.
Europe's rate decision is now in force, while the trade recovery remains uneven
The European Central Bank’s decision of 10 September takes effect on 16 September. The rate paid on banks’ overnight deposits is now 2.50%, up from 2.25%. This implements an earlier decision rather than delivering a fresh surprise this morning. A loan payment depends on its contract and reset date, so not every borrower’s bill changes today.
Euro-area trade figures for July, released on 15 September, provided a counterweight: nominal goods exports rose 9.0% year on year and imports 7.9%. July’s surplus was €14.2 billion, but the January–July surplus totalled only €17.0 billion, compared with €92.8 billion a year earlier. These are non-seasonally adjusted goods values. One better month has not offset the earlier weakness, and higher sales values alone do not prove larger volumes or profits.
15 September: a recovery in production is not a recovery for every consumer
August year-on-year changes released on 15 September: China’s industrial output grew 5.2% in real terms, while retail sales increased 0.4% in nominal terms.
These figures extend an important lesson from this period: a strong result in one part of the economy does not guarantee a strong economy overall.
A European business selling machinery to factories and one selling goods to households can therefore receive different signals from the same country. In a global portfolio, it helps to look beyond country weights to the end customer. The opportunity is where orders turn into profitable sales. Risk rises when a revenue forecast depends on consumers whose spending has not yet recovered.
Higher asset values and higher costs can coexist
Federal Reserve financial accounts released on 11 September showed a marked second-quarter difference. The value of corporate equities held directly and indirectly by US households and nonprofit organisations rose from 63.32 trillion to 74.03 trillion dollars, about 16.9%. The value of owner-occupied housing rose from 48.67 trillion to 49.79 trillion dollars, about 2.3%.
These are aggregate asset values at quarter-end, not the average family’s return or a performance contest between two investments. Both revaluations and transactions affect the changes. Even so, the data explain why equities matter to the broader economy: market moves can significantly change financial asset owners’ perceived ability to spend. The benefits are unevenly distributed because households do not all own the same amount of equities.
When a safer alternative pays more, investors may pay less today for a company’s distant future profits. For holders of long-term fixed-rate bonds, higher market yields also put pressure on the price of their existing bonds. But someone buying a new bond now faces different income terms. It is therefore essential to distinguish the price of assets already held from the yield available in the market today.
Quarterly takeaway: not every June assumption stayed intact
Hopes of normalised supply weakened, while the earnings story strengthened for some technology suppliers. The 10 September decision also challenged the simple assumption that European financing would automatically become cheaper soon. However, the slowdown in annual US inflation excluding food and energy from 2.5% to 2.4% is a counterweight to the claim that every inflation measure is worsening equally.
These forces meet in a portfolio’s individual holdings. An energy company and an energy-buying factory are not the same exposure. A supplier paid today and a customer expecting revenue several years from now also face different risks. Several funds do not protect against this overlap if their largest holdings are the same.
What does a change in asset values tell us, and what does it not?
Financial accounts show how much wealth a sector holds on a particular date. Aggregate equity wealth can rise because of prices and net purchases, while housing wealth also depends on the stock of properties and their valuations. Changes in these aggregate amounts are therefore not simply investment returns. A trillion means one thousand billion.
Quarter
What comes next
The evening of 16 September: the US decision is still ahead
The Federal Reserve, the US central bank, is already holding its 15–16 September meeting. The decision is scheduled for today at 21:00 Lithuanian time and the press conference at 21:30. At this morning’s information cutoff, the outcome is unknown and the federal funds target range maintained on 29 July remains 3.50–3.75%. The outcome must not be presented as something that has already happened.
Before that, US August retail sales and import-price data are scheduled for 15:30 Lithuanian time. They will help show whether demand is withstanding higher prices. A more restrictive central bank signal than markets expect could support yields and put pressure on highly valued shares; a softer signal could ease that tension. These are conditional scenarios, not guaranteed price directions. US industrial production on 18 September will provide a broader check than one regional survey.
The same three assumptions will be tested over the coming months
The first is the actual restoration of oil deliveries. The second is technology customers’ revenue after heavy investment. The third is consumers’ ability to buy more—not just to spend more at higher prices, but to purchase a greater volume of goods and services. If these improve together, more sectors can support growth. If expansion remains narrow, a few strong companies’ results will not offset every weaker part of a portfolio.
Important. This is general market analysis, not a personal recommendation to buy or sell. Historical data and company results do not guarantee future returns. Forecasts and conditional scenarios may not materialise.
How is the history preserved and updated?
All five periods in this edition share one information date. Week means the latest 7 days, quarter means 90 days, and year means the trailing 12 months. The next dated edition will have a separate URL. This text keeps its date and assessment; later events are not silently inserted into an older edition. Longer periods assess new evidence alongside earlier developments without repeating every headline.
