The bond market is charging more to fund the government and the AI buildout at the same time, and the cheapest funding currency on earth just stopped being cheap. That combination decides what your housing, credit, and tech exposure is worth by Friday.

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The Big Picture

Consumer Prices 

America’s Cost Pressures Are Moving Higher Again

Consumer prices rose 0.4% in August, a noticeable acceleration from the previous month, while annual inflation remained at 3.4%. Gasoline was one of the biggest drivers of the jump as energy costs rose sharply.

Price pressure was not limited to fuel. Housing and other everyday expenses continued to rise, keeping inflation well above the Federal Reserve’s preferred level even after years of higher interest rates designed to cool the economy.

Households Feel the Squeeze

Higher gasoline prices hit consumers immediately, but the impact can spread much further. Transportation, deliveries, travel, and businesses that rely heavily on fuel can all face higher operating costs when energy becomes more expensive.

Persistent inflation also makes household budgets harder to manage when borrowing is already costly. Credit cards, auto loans, mortgages, and other financing remain expensive, leaving consumers squeezed between elevated prices and high interest payments.

The Fed Gets a Tougher Decision

The latest inflation reading has increased expectations that the Federal Reserve could raise interest rates at its upcoming meeting. Financial markets quickly moved toward pricing in another increase after the report.

Another hike would aim to prevent inflation from gaining momentum, but higher rates also make borrowing harder for households and businesses. The Fed now faces a familiar problem: prices are still running too hot, while another attempt to cool them would bring another round of pressure across the wider economy.

Housing

U.S. Home Sales Just Fell to a 14-Month Low

Existing-home sales fell 2% to an annual pace of 3.98 million units, the weakest level since June 2025. Activity declined across the Northeast, Midwest, and South, while sales in the West were unchanged.

High borrowing costs remain the biggest obstacle. The average 30-year mortgage rate has climbed above 6.7%, leaving monthly payments far higher than many buyers expected when they began searching for a home.

More Homes Are Sitting Unsold

The slowdown is happening even as housing supply improves. Inventory climbed to 1.62 million homes, the highest level since November 2019 and nearly 6% above where it stood a year earlier.

Properties are also taking longer to sell, with the typical home spending 31 days on the market. Prices have not fallen enough to restore affordability, with the median existing-home price still rising to roughly $429,100.

Affordability Is Blocking a Recovery

The unusual combination of more supply and weaker sales shows that America's housing problem is shifting. A lack of available homes is no longer the only constraint, because financing costs are keeping many households from taking advantage of greater choice.

First-time buyers accounted for just 30% of purchases, well below the level associated with a healthy market. Until borrowing costs or home prices ease meaningfully, stronger inventory alone may not be enough to bring buyers back.

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Workforce

Thousands of U.S. Workers Just Got More Time on the Job

Roughly 170,000 Salvadorans living in the United States will retain Temporary Protected Status while the government considers next steps. Their protections had been scheduled to expire, which would also have affected their ability to work legally in the country.

About 152,000 Salvadoran TPS holders currently participate in the U.S. workforce and contribute an estimated $5.4 billion annually to the economy. No timeline has been provided for a final decision on whether their status will ultimately continue.

Employers Avoid a Sudden Labor Gap

Keeping those work permits active prevents thousands of employees from disappearing from payrolls at once. The impact matters most in labor-intensive industries where employers already struggle to replace experienced workers quickly.

A sudden reduction in available workers can force businesses to cut capacity, delay projects, raise wages to attract replacements, or pass higher labor costs into prices. The immediate extension removes that disruption from the economy for now.

Labor Supply Carries Wider Weight

Immigration has become increasingly important to U.S. workforce growth as retirements reduce the domestic labor pool. Fewer available workers can slow employment growth even when businesses still have positions to fill.

The economic effect also extends beyond employers. Workers earning wages spend money on housing, groceries, transportation, and services, supporting demand in the communities where they live. Keeping 152,000 people legally employed therefore preserves both labor supply and billions of dollars in economic activity, even as the longer-term status question remains unresolved.

Metrics to Watch

• 🏠 30-Year Mortgage Rate: 6.76% on Freddie Mac's weekly average, the highest since June 2025. Every 10 basis points here adds roughly $30 a month on a $450,000 loan. It is the single number deciding whether housing thaws or freezes harder into the fall selling season.
  

• 📈 30-Year Treasury Yield: Near 5.33%, the highest since 2007, with the term premium rebuilt to roughly 0.8 percentage points. Watch this instead of the 10-year, because it tells you what buyers charge for fiscal risk. The deficit runs near 6% of GDP, and every auction has to clear.
  

• 💱 USD/JPY: Around 154 after a seven-month yen high. If the Bank of Japan hikes on September 18 and this pushes toward 150, expect a leveraged unwind that hits your crowded positions first. Keep it on your screen even if you own zero Japanese assets.

• 🏦 AI Share of Investment Grade Issuance: About 20% this year, up from 1% in 2024. That is how fast one theme took over the high-grade bond market. Any widening in that paper tightens financing for the entire buildout.

• 📉 Initial Jobless Claims: 206,000 last week, with the four-week average also near 206,000. Firms are not firing, but hiring is thin, and the annual benchmark revision cut 79,000 jobs from the year through March. A move above 240,000 changes the whole Fed conversation.

Market Movers

• 🏛️ The term premium is back: Thursday's $22 billion 30-year auction drew strong demand with heavy end-investor participation, yet the yield still sits near 5.33%. Treasury doubled its long-dated buybacks and it barely dented the move. Investors are demanding to be paid for duration and deficits, and five-year inflation expectations near 2.2% say this is a supply story rather than an inflation panic.
  

• 🤖 AI capex meets the bond market: Nearly $500 billion of AI-related debt this year, about a fifth of high-grade supply, and roughly a third of the buildout now debt-funded. This is the year the AI trade became a credit cycle question, and credit cycles resolve slower and messier than equity drawdowns.
  

• 🇯🇵 The funding currency turned: The yen at a seven-month high with the 10-year JGB above 3% for the first time since 1996 pulls the rug from the carry trade. Leverage built on cheap yen gets unwound into a BOJ meeting next week, and correlations you rely on stop holding.
  

• 🏠 Housing froze with supply on the shelf: Inventory above 1.6 million for the first time since 2019, months of supply at a 10-year high, and sales still fell to a 14-month low. Sellers finally showed up and buyers could not afford the payment. Watch builder incentives, because that is where the margin damage lands.

Market Impacts

• 📈 Equities: The S&P 500 finished the week near 7,592 with ugly internals. Industrials and consumer discretionary each fell more than 1.3%, and rate-sensitive tech and REITs got hit as the long end backed up. How to play it: favor cash-generating businesses over long-duration stories until Wednesday's FOMC clears, and treat any bounce in the most leveraged names with suspicion.
  

• 🏦 Bonds: The 10-year sits at 4.94%, the 30-year near 5.33% at a 2007 high, and the two-year at 4.40%. The curve is bear-steepening, which is the shape you get when supply and policy risk both rise. How to play it: stay short duration, let bills and short credit pay you, and add long duration only after the dot plot is on the screen.
  

• 💱 Currencies: The dollar is firm against most of the majors but losing to the yen, which is the pair that matters for global leverage. Emerging market currencies with dollar debt are the pressure point. How to play it: hedge your Japanese equity exposure and expect translation drag in multinational guidance next earnings season.
  

• 🥇 Commodities: Gold near $4,390 pulled back as real yields spiked, silver churned around $65 an ounce, and copper held near $6.54 a pound on grid buildout demand. How to play it: treat gold weakness on higher real yields as an entry rather than a signal, and use copper as your read on how much of the data center buildout is actually getting energized.

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Key Indicators to Watch

• 📅 Monday, September 14: Quiet data day, so watch the front end of the Treasury curve and any new corporate issuance calendar. A heavy investment-grade week ahead of the FOMC tells you issuers want funding locked before the dot plot.
  

• 📅 Tuesday, September 15: General Mills (GIS) reports before the bell. Staples guidance is your cleanest read on whether households are trading down, and the commentary on promotions matters more than the earnings line.
  

• 📅 Wednesday, September 16: FOMC decision at 2:00 PM ET, presser at 2:30. The dot plot and the language on the balance sheet matter more than the move itself, because that is what prices the long end you are exposed to.
  

• 📅 Thursday, September 17: Weekly jobless claims plus the Philadelphia Fed manufacturing index, and the Bank of Japan begins its two-day meeting. Two labor reads and the start of the yen decision in one session.
  

• 📅 Friday, September 18: Bank of Japan decision plus September flash consumer sentiment and existing-home data revisions. A BOJ hike here is the trigger for the carry unwind you should be watching all week.

Everything Else

• 📊 The Magnificent Seven's reign may be ending. After Q1 volatility rattled markets, our analysts spotted 7 stocks poised to lead the second half of 2026.

• 🇬🇧 The UK economy grew 0.4% in July, beating expectations as computer programming and other AI-linked activity helped lift growth.

• 💰 The Reserve Bank of India could sell bonds or use FX swaps to drain excess cash after banking-system liquidity climbed above 10 trillion rupees.

• 📉 Global equity funds saw $15.5 billion of outflows last week as rising oil prices and inflation fears pushed investors toward cash and shorter-term bonds.

• 💴 Japan pledged to coordinate closely with the U.S. on currency markets following their recent joint intervention to support the yen.

• 🏭 German inflation rose to 2.9% in August, confirming another acceleration in price pressures across Europe’s largest economy.