Quarter · Market review
Quarter: energy supply, tariffs and costlier loans
Over 90 days, energy supply disruptions, import tariffs and interest-rate decisions changed business conditions. Technology suppliers’ revenue grew while their customers invested heavily in equipment and data centres. The latest increase in US bond yields could make these projects more expensive to finance. Suppliers generating cash therefore need to be assessed separately from customers whose investments have yet to earn a return.
Period covered: 2026-07-02 – 2026-09-29Information as of 15 min read
Important news followed the morning of 28 September: Monday’s US ten-year yield rose to 5.24%, the ECB president discussed energy-related inflation risks, and NVIDIA announced an additional $150 billion share-repurchase authorisation. These are developments from 28 September, not new decisions this morning. US job-openings data are due later on 29 September.
The proposed US–China import tariff reductions are not yet in force. NVIDIA’s authorisation does not mean the shares have already been repurchased. Energy inventories measure stored quantities, not current prices. Companies need to be assessed by their orders, cash generation and borrowing costs. Even rising profit does not guarantee a good investment if too much is paid for the shares.
Quarter
What happened
The starting point: interest rates had already risen on 17 June
This 90-day period begins on 2 July. 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 implementation: 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. Companies therefore needed to assess not just raw-material prices, but tariffs, payment terms and their ability to deliver goods.
Late July and August: technology suppliers earned revenue while customers invested
Technology suppliers’ revenue grew while their customers spent heavily on equipment and infrastructure. 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: a higher energy-price forecast was followed by an ECB rate increase
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 in a particular September session 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 were known before the Federal Reserve meeting of 15–16 September, which subsequently raised the target range.
? 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.
16–24 September: US bond yields rose again after a brief decline
On 16 September the Federal Reserve raised its target range to 3.75–4.00%. An earlier European decision lifting the deposit rate to 2.50% took effect on the same day. The US ten-year yield fell to 4.96% on 21–22 September, but reached 5.18% on 24 September. The fall in US bond yields was therefore short-lived.
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The preliminary US Purchasing Managers’ Index, or PMI, reached 58.4 in the release of 23 September, compared with 56.0 in August. Initial unemployment benefit claims of 197,000 for the week ending 19 September, released on 24 September, added to the evidence that the economy was not weakening sharply. These are signals from 23–24 September, but neither a survey nor one week of claims is a final measure of an entire quarter’s growth.
? Purchasing Managers’ Index: what does the threshold mean?
The company survey compares activity with the previous month. Above 50 generally indicates expansion and below 50 contraction. A reading of 58.4 does not mean growth of 58.4%; the preliminary measure may be revised.
September’s decisions extended beyond the US and euro area. On 18 September the Bank of Japan set an overnight interest-rate target of 1.25%, effective from 24 September. On 17 September the Bank of England left Bank Rate at 3.75%. These different paths matter for Japanese bonds and yen-funded investments, as well as British companies’ borrowing costs.
25–28 September: uneven demand and trade relief not yet in force
US August durable-goods orders, reported on 25 September, reached $338.6 billion and were virtually unchanged from revised July. Orders for non-defence capital goods excluding aircraft nevertheless rose 1.6%, while shipments increased 0.6%. These are monthly changes adjusted for seasonality, but not for prices. On the same day, the University of Michigan’s final September consumer sentiment index stood at 48.1, compared with 51.7 in August. Business-equipment demand and households’ assessments were therefore sending different signals.
On 27 September, the White House published US and Chinese product lists proposed for lower import tariffs worth about $30 billion in each direction. These were published lists, not tariff reductions already in force. On 28 September, China reported that August profit at larger industrial enterprises was 4.2% higher than a year earlier; July’s growth was 11.2%. Slower annual growth was not a month-on-month decline in profit. Companies’ profits would depend not only on lower tariffs, but also on selling more goods at profitable prices.
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Quarter
What matters now
The US ten-year bond yield reached 5.24%: companies may face higher borrowing costs
Companies borrowing to expand may have to pay higher interest rates. On 28 September, the US ten-year Treasury yield rose from Friday’s 5.17% to 5.24%. The two-year measure increased from 4.81% to 4.92%, and the thirty-year from 5.49% to 5.56%. Yields rose on both shorter- and longer-term bonds. These figures do not establish which particular news item contributed most to the rise.
? Bond yields and basis points: what does the change mean?
A yield relates a bond’s market price to its future payments; these are the US Treasury’s standardised measures for the respective maturities. A rise from 5.17% to 5.24% is 0.07 percentage points, or 7 basis points, not a 7% investment return. When yields rise, prices of existing fixed-rate bonds generally fall.
A company’s borrowing rate is not identical to this measure, but government borrowing costs provide an important reference point. When that reference rises, new loans or bond issues can become more expensive for a company, unless lenders reduce the additional interest they charge for that company’s risk. This matters for property companies, utility companies and data centres financed with borrowing. Existing fixed-rate loans do not automatically become more expensive after a single market session.
The same change affects new bond buyers and existing holders differently. New bond buyers see a higher yield, while the value of an existing longer-maturity portfolio may fall. Higher interest rates may affect a technology company with little debt less than a customer borrowing to build new data centres. The next US labour-market and consumer-price releases will help test whether household spending and business demand are supporting the economy, or prices are still rising too quickly.
The ECB is watching whether costlier energy will push up other prices and wages
For Europe, the issue is not only how much energy has become more expensive, but whether the increase spreads to other prices. On 28 September, European Central Bank President Christine Lagarde noted that there were not yet clear signs that rising energy costs have already led to a lasting increase in wage growth. This is the ECB’s assessment, not a guarantee or a new interest-rate decision. Compensation per employee grew 3.3% year on year in the second quarter, compared with 3.6% in the first; these figures should not be confused with inflation.
? Second-round inflation effects: what is the central bank looking for?
The first effect is the direct increase in energy prices. A second round occurs when higher costs spread more widely into wages and other goods and services prices. An energy-price jump alone does not prove that such a more persistent price-setting process has become established.
Energy prices rose faster in August, but other prices did not all accelerate with them. Annual headline euro-area inflation rose from July’s 2.9% to 3.2%, and energy inflation from 10.3% to 14.3%. Inflation excluding energy and food nevertheless slowed from 2.5% to 2.4%. Faster energy inflation therefore does not mean that all goods and services prices are accelerating equally. The ECB is also assessing whether higher long-term rates will slow the economy and reduce companies’ ability to raise selling prices.
US inventory data show that supplies of crude oil and finished fuels differ. The latest US weekly release was published on 23 September for the week ending 18 September. Commercial crude stocks excluding the strategic reserve were 426.4 million barrels, around 2% above their five-year seasonal average. Petrol stocks were 6% below their own average and distillates 12% below theirs. This compares inventories; it is not today’s oil price or an equivalent change in fuel prices.
? Distillates and seasonal averages: what is being compared?
Distillates include diesel and heating-oil products. Each product’s stocks are compared with its own average for that time of year over five years. More crude in storage does not always mean sufficient finished fuel has reached buyers.
More expensive fuel and electricity can reduce transport and chemical companies’ profits. Households spending more on energy also have less money left for other goods. Higher fuel inventories and slower price increases would help these businesses and their shareholders. New supply disruptions, by contrast, could raise costs and selling prices. The US inventory report on 30 September needs to be read for fuel stocks and refining activity, while European wage and services-price trends remain important.
NVIDIA’s $150 billion authorisation is not a completed share buyback
NVIDIA announced a plan to buy more of its own shares, not new sales results. On 28 September, chip designer NVIDIA announced an additional $150 billion share-repurchase authorisation. After the increase, the company can spend a total of $235 billion on further repurchases under the programme. The company expects to use that balance through the end of its fiscal 2028. This is a plan, not completed purchases, a guaranteed payment on a specific date or newly earned profit.
? Share-repurchase authorisation: what changes for a shareholder?
Authorisation allows a company to buy its own shares, but does not itself spend cash or reduce the share count. If actual repurchases reduce the number of shares, the same total profit is divided among fewer shares. New share issuance and the purchase price also affect the outcome; authorisation is not a promised investment return.
The scale needs careful reading: the additional $150 billion is part of the total $235 billion remaining balance, not another amount to add to it. NVIDIA’s ability to repurchase shares may differ from its customers’ ability to finance data centres. This matters to holders of broad US equity funds as well as individual technology shares. One company’s buyback programme does not prove that artificial-intelligence infrastructure has already paid off for all its customers.
Repurchases could benefit shareholders if the company generates enough cash both to buy shares and to fund worthwhile projects. But it could pay too much for its shares. If repurchases merely offset newly issued shares, the total share count would not fall. Chip suppliers and their customers therefore need separate financial assessments. Later NVIDIA reports will show how much cash was actually spent on repurchases and how the share count changed.
The week’s question: would lower US–China tariffs increase company profits?
What changed since yesterday? The US–China proposal to reduce some import tariffs is still under consideration. But Monday’s rise in bond yields could make new business borrowing more expensive. The ECB discussed whether rising energy costs would push up other prices, while NVIDIA increased the amount authorised for share repurchases. Companies face different needs: some need more buyers, some cheaper loans, and others need to decide how to use cash they have earned.
Lower tariffs would help if they took effect and allowed companies to cut costs or increase profitable sales. But more expensive loans, weaker demand or higher energy costs could offset part of that benefit. The next labour-market and consumption releases will help distinguish these scenarios. No precise equity-index or exchange-rate moves are given here because prices for the full comparison period have not been verified. Dollar movements also affect the value of a euro investor’s US holdings if the currency risk is unhedged.
Higher interest rates do not necessarily worsen every company’s prospects equally. If stronger real growth drives them higher, more sales may offset part of companies’ financing costs. If prices rise without companies selling more, extra sales do not offset the higher costs. The yield table alone cannot distinguish these scenarios. Household spending adjusted for price changes, company orders and the profit retained from sales therefore need to be assessed together, rather than assuming that higher rates are equally bad for every equity.
Quarter
What comes next
What comes next: labour demand, consumption and plans put into practice
- US job-openings data on 29 September. August’s Job Openings and Labor Turnover Survey is due at 17:00 Lithuanian time. It has not been released at the morning cutoff; the question is whether companies still need as many new workers.
- US prices and consumption on 30 September. August personal spending and its price index, plus the third estimate of second-quarter economic growth, are due at 15:30 Lithuanian time. These are upcoming releases, not known results.
- Will announced decisions be put into practice? The US energy report on 30 September will test fuel inventories. US–China trade needs final terms for applying lower tariffs, while NVIDIA needs later reports of completed repurchases, not just the size of its authorisation.
? Job openings and consumption prices: what are we monitoring?
The Job Openings and Labor Turnover Survey measures vacancies and movements of workers, not simply the number of newly created jobs. The Personal Consumption Expenditures Price Index measures price changes in goods and services consumed. Real consumption expenditure removes the effect of price changes and should not be confused with the price index.
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.
