Year · Market review
The year falling interest rates gave way to an energy and earnings test
Over the year, more than the headlines changed: several fundamental investment assumptions shifted. US interest rate cuts gave way to a pause, while energy contributed to rate increases in Europe. Trade agreements were accompanied by new rules, and actual technology profits increasingly need to be weighed against customers' enormous investments. On 16 September, it is important to remember this entire sequence, not just the latest price news.
Period covered: 2025-09-17 – 2026-09-16Information as of 17 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.
Year
What happened
Autumn 2025: US interest rates fell while Europe opted for a pause
At the start of this twelve-month period, the US federal funds target range was 4.25–4.50%. The Federal Reserve, the US central bank, lowered it by 0.25 percentage points on 17 September, 29 October and 10 December. After three cuts, the range reached 3.50–3.75%. The decisions took effect the day after they were announced.
Lower interest rates helped some borrowers, but their benefits cannot be separated from the reason for the cuts. If a central bank cuts rates because it sees weaker demand, a company’s cheaper loan may be offset by poorer sales. That is why the simple rule that “rates were cut, so that is good for shares” does not explain the market’s entire reaction.
During the autumn, the European Central Bank kept the rate paid on banks’ overnight deposits at 2.00%. Its 11 September decision was announced before this rolling twelve-month period began, but established its starting backdrop. The rate remained unchanged at the October and December meetings. The US and the euro area were therefore already following different paths.
November: trade gained some breathing room, but not an end to every barrier
On 1 November, the US announced the terms of an agreement with China providing for reductions in some tariffs and a suspension of rare-earth export restrictions from 10 November. This was an important signal of relief for supply chains. Rare earths are used in a range of industrial and technological equipment, so the availability of these materials matters to more than just their producers.
However, temporary relief is not a permanent, unchanging rule. A factory needs to know when a component will arrive and what its final cost will be. Uncertainty encourages companies to hold larger inventories or seek a more expensive alternative supplier. The November decision therefore cannot automatically be presented as the tariff applying to all goods today: subsequent measures have their own legal bases and conditions.
January 2026: switching energy suppliers became a concrete plan
On 26 January, the Council of the European Union approved a gradual phase-out of Russian gas imports. A full ban on liquefied natural gas is scheduled from the beginning of 2027, and on pipeline gas from autumn 2027. These are future deadlines with transition periods, not a halt to all imports on that January date.
This decision turned diversification into a matter of contracts and infrastructure. Other suppliers, ships, terminals and reserves were needed. Over time, a wider choice of suppliers may reduce dependence, but the transition itself also costs money. Investors need to distinguish the long-term benefits of resilience from the near-term bills for energy and infrastructure.
Meanwhile, the US central bank was in no hurry to continue the autumn cuts. The 3.50–3.75% range remained unchanged at its January, March and April meetings. Europe’s February, March and April decisions also maintained the 2.00% deposit facility rate. Earlier cuts were not a promise that every subsequent meeting would follow the same pattern.
February: the legal basis for tariffs changed
On 20 February, the US Supreme Court ruled that the International Emergency Economic Powers Act does not authorise the president to impose tariffs. The decision restricted a specific legal basis. It did not mean that all US import tariffs disappeared, because other measures relied on different laws.
On the same day, the administration announced a temporary 10% import surcharge, with exemptions, under a different section of the Trade Act. It took effect on 24 February, and its 150-day term ended on 24 July. This is a historical measure, not a tariff automatically applying to all imports today.
For businesses, changes like these mean having to recheck a product’s origin, classification code, delivery date and exemptions. An importer uncertain of the final cost may delay an order or hold more inventory. Even a politically favourable headline therefore does not always immediately reduce a company’s costs or increase its sales.
February's results showed that technology demand was more than a promise
On 25 February, chip designer NVIDIA reported results for its financial year ended 25 January. Revenue reached $215.938 billion, while net income under US accounting standards was $120.067 billion. Both figures were 65% higher than in the company’s previous financial year. These are results for a completed period, not a forecast for calendar year 2026.
This matters to the longer story: technology suppliers were generating visible, actual earnings well before the summer results season. But profit does not answer the question of an investment’s price. Even a successful company may be valued on very high expectations for the future that subsequently prove harder to meet.
Spring: geopolitical risk became an oil delivery problem
The war in the Middle East that began on 28 February disrupted oil shipments through the Strait of Hormuz. On 11 March, International Energy Agency member countries agreed to make 400 million barrels of emergency oil reserves available to the market. This was the largest coordinated release amount in the agency’s history. The decision was a commitment to release reserves, not the release of the entire volume in one day.
Reserves can buy time, but cannot replace commercial supply indefinitely. When reliable deliveries are lacking, the effects spread from the oil market to fuel, transport, chemicals and household purchasing power. More expensive energy can simultaneously raise inflation and weaken growth. A central bank faces an uncomfortable choice: raising interest rates does not produce additional oil, but cutting them may stimulate demand at a time when supply is constrained.
May: the story of global trade was not only one of closing borders
On 1 May, provisional application of the trade agreement between the European Union and the South American Mercosur countries began. Tariffs on some goods were reduced or removed. This marked a move from negotiations to applicable trade preferences, but was not yet the full, finally ratified partnership agreement.
European exporters gained opportunities to reach buyers on more favourable terms. For importers, a wider choice may help reduce dependence on a single supplier. At the same time, greater competition puts pressure on more vulnerable sectors. Actual orders and the use of trade preferences ultimately reveal the investment significance, not just the headline on the day an agreement is signed or takes effect.
June and July: Europe's interest rate direction reversed
On 11 June, the European Central Bank announced a 0.25 percentage point rate increase. The deposit facility rate rose to 2.25% from 17 June. It was left unchanged on 23 July. The US maintained its 3.50–3.75% target range at the 17 June and 29 July meetings. US cuts had therefore given way to a pause, while Europe had already turned towards higher rates.
The 18 June memorandum between the US and Iran raised hopes of normalising supply. But the International Energy Agency’s 10 July report already described ceasefire breaches on 7–8 July. Its August edition showed weaker oil export flows in July. An agreement and its implementation proved to be two separate stages that matter to investors.
On 23 July, the European Union expanded its energy and financial sanctions against Russia. The Office of the US Trade Representative announced a decision concerning 60 economies under Section 301 of the Trade Act on the same day. Tariffs depended on the product and applicable conditions; this was not an automatic extension of the temporary surcharge announced in February. Over the year, both supply routes and the rules governing what buyers pay for goods changed.
Summer: the supplier's profits grew while customers faced the expansion bill
On 26 August, NVIDIA reported revenue of $96.221 billion for the quarter ended 26 July. Revenue was 106% higher and operating profit 124% higher than a year earlier. This result confirmed that demand for the supplier remained real. Its customers, however, pay for equipment, data centres and electricity infrastructure before receiving all their expected revenue.
In late July, Microsoft reported that it generated $55.4 billion in operating cash flow during the quarter ended 30 June and spent $35.8 billion in cash on purchases of long-term assets. In Oracle’s quarterly results released in September, capital expenditure already exceeded operating cash flow. These are not identical businesses, but the comparison shows why the technology story requires monitoring more than revenue growth.
Early September: prices brought attention back to interest rates
On 9 September, the US Energy Information Administration raised its forecast for the average Brent price in the second half of the year to around $90 per barrel. The publication used model inputs finalised by 3 September. It therefore does not measure the impact of later military reports in September and is not the latest exchange price.
On 10 September, the European Central Bank announced another 0.25 percentage point rate increase. On 11 September, the US Consumer Price Index showed annual price growth of 3.4% in August, unchanged from July. Seasonally adjusted monthly growth increased from 0.1% to 0.4%. However, annual growth in the basket excluding food and energy slowed from 2.5% to 2.4%. Monthly growth in this basket nevertheless increased from 0.2% to 0.3%. The conclusion is therefore not that “all price indicators are worsening”, but a more complex combination of differing rates of change.
The interest rate path in one place
The table shows every change to key US and euro area interest rates announced during this twelve-month period, together with the latest July decisions to leave them unchanged. It is not a list of every meeting. Europe’s decision announced on 10 September takes effect on 16 September, the date of this edition.
| Decision date | Region | Before | After | When it applies |
|---|---|---|---|---|
| 2025-09-17 | US | 4.25–4.50% | 4.00–4.25% | From 18 September |
| 2025-10-29 | US | 4.00–4.25% | 3.75–4.00% | From 30 October |
| 2025-12-10 | US | 3.75–4.00% | 3.50–3.75% | From 11 December |
| 2026-06-11 | Euro area | 2.00% | 2.25% | From 17 June |
| 2026-07-23 | Euro area | 2.25% | 2.25% | Left unchanged |
| 2026-07-29 | US | 3.50–3.75% | 3.50–3.75% | Range left unchanged |
| 2026-09-10 | Euro area | 2.25% | 2.50% | In effect from 16 September |
For the US, the table shows the federal funds target range; for the euro area, it shows the specific deposit facility rate. On 16 September, Europe’s rate is already 2.50%. Compared with the beginning of the period before the US decision of 17 September 2025, the US range is 0.75 percentage points lower and the European rate in force is 0.50 percentage points higher. This evening’s US decision is not yet in the table.
? Consumer Price Index: why does the monthly change matter too?
The Consumer Price Index is compiled using the prices of goods and services and their weights in consumption. The annual change compares prices with the same month of the previous year. The seasonally adjusted monthly change helps show the latest pace. The annual figure can therefore remain unchanged even when prices rise faster in the latest month.
Mid-September: the timing of recovery became a key assumption again
The International Energy Agency’s 11 September forecast projects a larger decline in oil supply than in demand this year. This is a forecast, not a final annual result.
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Year
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 yet a recovery for all consumers
August’s annual changes released on 15 September showed Chinese industrial growth of 5.2% in real terms and retail sales growth of 0.4% in nominal terms.
These figures reinforce an important lesson from this period: a strong result in one part of the economy does not guarantee a strong whole.
A European company selling equipment to factories and one selling goods to households may therefore receive different signals from the same country. When assessing a global portfolio, it is useful to look beyond a country’s weight to the end customer. Opportunity arises where orders become profitable sales. Risk grows when a revenue forecast relies on a consumer whose spending has not yet recovered.
Over the year, equities became an even more important part of wealth
New data help explain why stock market fluctuations matter to more than just traders. In the US central bank’s financial accounts released on 11 September, the value of corporate equities held directly and indirectly by households and nonprofit organisations reached $74.03 trillion at the end of the second quarter. The value of owner-occupied housing was $49.79 trillion. The equity total was approximately one and a half times as large.
From the first to the second quarter, the value of equities rose by about 16.9%, while housing increased by around 2.3%. These are changes in aggregate asset values, affected by valuations and transactions, not price gains alone. They do not show the average family’s return, the value of all real estate, or that every resident held more in equities than in housing. They do, however, show how significantly market fluctuations can alter the position of financial asset owners.
Long-term yields are affected by expectations for future inflation, the supply of debt and the compensation investors demand for lending money over a long period. Even after the US autumn rate cuts, financing corporate investment did not necessarily become cheap. This matters for shares through debt costs and through how much investors are willing to pay for future earnings.
The year's conclusion: consider both higher values and the dependence that remains
Technology profits challenged the overly simple idea that all growth was based solely on promises. But higher asset values did not in themselves reduce concentration. If the same large companies recur across several funds, their results and changing expectations can affect many parts of a portfolio at once.
A practical check starts with three questions: what the different funds actually hold, when the invested money will be needed, and which companies have debt to refinance. Region and currency are also worth adding. A euro investor’s result in the US market also depends on the dollar’s exchange rate, and a wider interest rate differential alone does not determine its direction. These questions help explain risk, but are not an individual instruction to buy or sell.
A policy rate, an interbank benchmark and a bond yield are not the same thing
The federal funds target range describes the overnight interest rates targeted by the US central bank. The European Central Bank’s deposit facility rate applies to banks’ overnight deposits. The Euro Interbank Offered Rate, or Euribor, is a separate benchmark often used in loan agreements. A bond’s yield also depends on its price, maturity and risk. A change in one indicator does not imply an identical change in the others.
Year
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.
Three checks matter most over the longer term
The first is energy supply: whether actual deliveries will confirm political agreements. The second is the return on technology investment: whether customers’ revenue and operating cash flow will catch up with their large outlays. The third is the implementation of trade rules: which conditions apply to specific goods, rather than which headline appeared several months ago.
If supply becomes more reliable, corporate profit growth broadens and price pressures ease, some of today’s concerns will diminish. If investments take longer to pay off and financing remains expensive, heavy dependence on a handful of technology companies will become more significant. Both scenarios are conditional. The purpose of a year-in-review is to keep the sequence of events in view and check which assumptions still hold, not to offer a single, unchanging promise about the future.
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.
