Investment Insights — Week of September 14, 2026

Hi, I'm Tim Gereg, Head of Capital Solutions at Texas Capital.

Last week was incredibly eventful, as we had breakout levels in U.S. treasuries and one of the most anticipated economic releases in years. Let's dive in.

After a moderate PPI report on Thursday, yields took off. The two-year Treasury was up 18 basis points and the 10-year was up 12 basis points just that day alone. And although the 10-year and 30-year auctions last week were strong despite the highest level in nearly two decades, the rate selloff deepened after the Treasury's buyback operation purchased just under $5.2 billion in securities, well under the $6 billion cap previously announced.

Core CPI was really the story on Friday. The month-on-month print came in one-tenth of 1% higher than expectations, 0.3 versus 0.2%, with the year-on-year numbers of headline and core coming in at 3.4 and 2.4%, respectively. All in, yields finished the week significantly higher, with a two-year up 25 basis points and the 10-year up 18 to 496. While CPI came in only a touch firmer than expected, I believe the chairman has set too high a bar for this committee to hold at this meeting. Through his prior press conferences and Jackson Hole, the market's reaction would be significant if they were to not hike. If you recall July's FOMC meeting, 2s10s steepened as much as 12 basis points intraday, as Warsh's softening tone brought down the front end, and the potential for higher inflations caused a pop in long-end rates. Of course, a hike this week or even several consecutive hikes through year-end will do little to tame the supply side inflation problem, but that doesn't mean they won't.

If the committee does deliver a hike this week, coupled with hawkish rhetoric, I do expect we'll find some support to the long end, which, as of this Monday's recording, the 10-year has just breached 5% for the second time in 19 years. We're also looking forward to the Fed's Summary of Economic Projections, which contains the beloved dot plot. In the June SEP, the chairman didn't submit his own dot, but eight of the 18 saw a hold through year-end, while another eight saw one to two hikes. It will be interesting to see how the committee is framing the final months of 2026 and their expectations of growth and inflation going forward. Front month WTI and Brent prices are also back over $100, with more conflict over the weekend, and the key East-West pipeline being shut down following multiple attacks and likely won't open for over a month. That's it for this week. Let us know how we can help.