Titan Wealth International Weekly Investment Update

The Federal Reserve delivered its first rate hike since July 2023, the Bank of Japan raised rates to their highest level since 1995, and the Bank of England held firm — three decisions landing within 48 hours of each other that collectively signal a meaningful shift in the global policy landscape.

The Nasdaq outperformed, gaining 0.72% as AI-related stocks recovered from a sharp early-week selloff, while the Dow shed 1.7%, the S&P 500 dipped marginally, and small- and mid-cap indices declined more meaningfully as rising borrowing costs continued to weigh on rate-sensitive areas of the market.

Federal Reserve Raises Rates in Warsh’s First Policy Move

The week’s dominant event was Wednesday’s FOMC decision. The Fed raised the federal funds target range by 25 basis points to 3.75%–4.00% — Kevin Warsh’s first change in monetary policy since becoming chair in May — backed unanimously by all twelve rate-setters.

The updated dot plot pencilled in one further hike before year-end, though the committee remains divided beyond 2026 with eight of eighteen officials projecting one additional move in 2027 and the remainder expecting no change or a cut.

Warsh’s characterisation of the move as “removing a dose of policy accommodation” was notably significant — language implying the Fed does not yet view current policy as genuinely restrictive and retains scope to act further if inflation remains elevated. The longer-run estimate of the neutral rate also moved modestly higher.

Donald Trump responded swiftly to the decision by publicly demanding the central bank cut rates to 1%, though his comments drew little market reaction given the strength of the data underpinning the hike.

AI Safety Debate Triggers Selloff and Recovery

The early part of the week was dominated by an unexpected development in the AI space. On 12 September, Anthropic CEO Dario Amodei published an essay calling for AI companies to slow development of their most advanced models to address societal safety risks — comments quickly endorsed by OpenAI’s Sam Altman and Elon Musk.

The resulting selloff in semiconductors, memory equipment, and AI infrastructure stocks was sharp but short-lived: NVIDIA’s Jensen Huang and other industry leaders stabilised the sector by Tuesday, and AI-related names steadily recovered lost ground through the remainder of the week, with the Nasdaq ultimately closing in positive territory.

US Treasury Yields Briefly Breach 5%

The 10-year US Treasury yield briefly touched 5.04% intraday — its highest level since 2007 — early in the week as fresh Saudi infrastructure attacks and record diesel prices amplified inflation anxiety, before retreating to 4.94% on Thursday as reports emerged that pipeline damage may be less severe than initially feared.

Bank of England Holds as Inflation Rises

In Europe, the STOXX 600 fell 0.57% and in a notable market milestone, L’Oréal overtook LVMH to become France’s most valuable listed company for the first time since 2017.

The Bank of England held rates at 3.75% by a 6–3 vote, warning that further tightening may be needed if the energy shock generates more persistent inflation.

UK inflation rose to 3.1% in August from 2.9%, and the BoE also announced a pause in government bond auctions, a move expected to ease modest upward pressure on gilt yields.

Bank of Japan Hikes to Highest Rate Since 1995

In Japan, the Nikkei gained 1.57% as the Bank of Japan raised its policy rate to 1.25% — its highest since 1995 — in a 7–2 vote. Core CPI rose 1.7% year-on-year in August, below the 2% target, though Governor Ueda warned an overshoot remains possible. The yen weakened sharply past JPY 157 from JPY 153 the prior week.