Week in review
Week of 21 September: yields at 2007 highs, dollar at a two-month high
The first week after the Fed's hike. US 10-year yields near 5.2%, the dollar at a two-month high, gold near its August lows, oil swinging on Hormuz headlines, and what the week meant on a challenge account.
The week after the Federal Reserve's first rate hike since 2023 was about one thing: higher rates for longer. Strong US data pushed yields to levels not seen in almost two decades, the dollar kept climbing, and gold and oil moved sharply on every headline. Prices below are as of Thursday's close or Friday afternoon, before the week's final session.
The backdrop: the Fed hiked, and wants more
On 16 September the Fed raised its target range by 25 basis points to 3.75% to 4.00%, in a 12 to 0 vote. The median projection shows one more hike this year. By the end of this week, markets were pricing roughly a two-in-three chance of another move in October.
The week's data
| Release | Result | Why it mattered |
|---|---|---|
| US flash composite PMI, September | 58.4, up from 56.0 | Fastest growth in more than five years, with input costs rising at the steepest pace in almost four |
| US initial jobless claims | 197,000 | Below the 204,000 expected, close to historic lows |
| US durable goods orders, August | Virtually unchanged | Transportation equipment down 0.6% |
A strong PMI and low jobless claims point the same way: an economy that does not need lower rates. That is what the bond market traded.
Yields: highest since 2007
The US 10-year yield reached about 5.2%, its highest since 2007, and the 30-year about 5.5%, a level last seen in 2004. Japan's 10-year yield sat near 3.1%, a 30-year high. The bond selloff eased on Friday as oil cooled.
The dollar and major pairs
- Dollar index, Thursday
- about 101.25
- Change on the week
- about +1%
- EUR/USD, Monday
- about 1.149
- EUR/USD, Thursday
- about 1.137
The dollar reached a two-month high on the back of the PMI. EUR/USD slid through the week, and the yen stayed under pressure.
Gold, oil and stocks
Gold traded around $4,260 to $4,300 an ounce, close to its lowest level since early August, as a firmer dollar and higher real yields weighed on it. Silver fell with it, to around $63.60.
Oil was the most headline-driven market of the week. Brent gained 3.4% on Thursday to settle at $106.60, then came off its highs on reports that US and Iranian negotiators were discussing a phased reopening of the Strait of Hormuz. It traded near $105 on Friday.
Stocks held up better than bonds. The S&P 500 closed Thursday at 7,704, almost flat on the day. The Trump and Xi summit in Washington came with an extension of the US and China trade truce by two months, to 10 January.
What the week meant on a challenge account
This was a week of large moves on single headlines, and that is when the limits of a challenge account matter most.
- Gold at size. A $30 swing in gold is $3,000 on one lot. On a $50,000 Sprint that is more than the whole day's room of $2,000. Size gold positions against the room, not the balance. See why 1% risk is a quarter of your day.
- Oil on headlines. A 3% daily move on reports and denials is the kind of move where stops slip. Slippage counts against floating equity like any other loss.
- Spreads around releases. Spreads can widen around high-impact data. News trading is permitted on VFUNDED, but the company may restrict trading around high-impact events, and news bracketing, placing opposing orders around a release to catch the spike, is prohibited (Challenge Rules 6.5 and 7.2).
- Weekend exposure. With talks on Hormuz ongoing, a position held over the weekend is exposed to a gap at the open, and the daily limit applies on weekends too. See how the daily drawdown limit works.
Next week
Two releases stand out: the August PCE inflation report on Wednesday 30 September, and the September jobs report on Friday 2 October at 8:30 a.m. New York time. With markets split on an October hike, both can move the dollar, gold and indices. A full preview of the week's events comes on Monday.
This article is market commentary for information only. It is not a forecast, a recommendation or financial advice, and prices are approximate, taken from public market reports at the time of writing. VFUNDED provides simulated trading evaluations: trading activity is simulated and performance rewards are not guaranteed.