{"id":19894,"date":"2026-09-12T16:18:43","date_gmt":"2026-09-12T22:18:43","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=19894"},"modified":"2026-09-12T16:18:43","modified_gmt":"2026-09-12T22:18:43","slug":"fed-rate-hike-coming-this-week-deteriorating-market-breadth-and-more-on-international","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=19894","title":{"rendered":"Fed Rate Hike Coming This Week, Deteriorating Market Breadth, and more on International"},"content":{"rendered":"<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/cmefedfundsprobability91226.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-19895\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/cmefedfundsprobability91226-300x190.png\" alt=\"\" width=\"300\" height=\"190\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/cmefedfundsprobability91226-300x190.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/cmefedfundsprobability91226-1024x647.png 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/cmefedfundsprobability91226-150x95.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/cmefedfundsprobability91226-768x485.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/cmefedfundsprobability91226.png 1294w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>This is the CME&#8217;s fed funds futures probability bar chart for this coming FOMC announcement on Wednesday, September 16th, 2026, and it says there is an 87.3% probability that the FOMC will raise the current fed funds from a range of 3.50% to 3.75% (midpoint 3.625%) to a new range of 3.75% &#8211; 4% (midpoint of 3.875%.)<\/p>\n<p>Assume we&#8217;ll see a fed funds rate hike Wednesday afternoon.<\/p>\n<p>The eternal question is always how much of this is already in the bond market ? Given the yield curve shift just this past week, you can easily conclude that a big shift has already happened.<\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/yieldcurvespread91126.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-19897\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/yieldcurvespread91126-300x147.png\" alt=\"\" width=\"300\" height=\"147\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/yieldcurvespread91126-300x147.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/yieldcurvespread91126-150x74.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/yieldcurvespread91126-768x378.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/yieldcurvespread91126.png 834w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>The top 1\/3rd of the table shows the weekly close by key maturities since July 31 for the Treasury yield curve.<\/p>\n<p>The middle part of the table shows the key spreads.<\/p>\n<p>The bottom part of the table shows the change in yields per maturity each week.<\/p>\n<p>The key level I am waiting for is the 10-year Treasury yield to make a weekly close above 5%. That could happen this week.<\/p>\n<p>Here&#8217;s the YTD returns for some key bond market indices and ETF&#8217;s though:<\/p>\n<ul>\n<li><em><strong>Barclay&#8217;s Agg:<\/strong><\/em> -1.43%<\/li>\n<li><em><strong>Hi-Grade Corp:<\/strong><\/em> -1.52%<\/li>\n<li><em><strong>High-yield Corp:<\/strong> <\/em>+2.01%<\/li>\n<li><em><strong>Muni (MUB):<\/strong> <\/em>-1.59%<\/li>\n<li><em><strong>MBS (MBB):<\/strong> <\/em>-1.27%<\/li>\n<li><em><strong>Emerging Mkt (EMB):<\/strong><\/em> +0.37%<\/li>\n<\/ul>\n<p>Source: Bloomberg<\/p>\n<p>As readers can see, it&#8217;s hardly Armageddon in bond-land yet.<\/p>\n<p>In 2022, the Barclay&#8217;s Agg finished down 13%, it&#8217;s worst annual return on record, or since 1976 when the benchmark was supposedly was created.<\/p>\n<p><em><strong>Market Breadth:\u00a0<\/strong><\/em><\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/BespokeBreadthreport91126.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-19901\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/BespokeBreadthreport91126-300x239.png\" alt=\"\" width=\"300\" height=\"239\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/BespokeBreadthreport91126-300x239.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/BespokeBreadthreport91126-1024x817.png 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/BespokeBreadthreport91126-150x120.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/BespokeBreadthreport91126-768x613.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/09\/BespokeBreadthreport91126.png 1053w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>Bespoke addressed the market breadth issue in this week&#8217;s Bespoke Report, which says breadth peaked about a month ago, and now short-term breadth is very oversold, which might have accounted for the nice rally on Friday, September 11th.<\/p>\n<p>Not shown is the Bespoke table that shows the weekly, monthly, 3-month, 6-month and annual returns all positive after the short-term breadth table gets this oversold.<\/p>\n<p><em><strong>International:<\/strong><\/em><\/p>\n<p>At a JPMorgan Investment Forum this past week, in Oak Brook, Illinois, David Kelly, JP Morgan&#8217;s rock-star Chief Global Strategist opened the forum with a 30-minute discussion that partially touched on international equity investing. Despite the returns on international equity funds\/ETF&#8217;s, etc. which <a href=\"https:\/\/fundamentalis.com\/?p=19855\">this blog discussed in this post<\/a> over the long Labor Day weekend, after David took a poll of those attendee&#8217;s overweight international, not one person raised their hand.<\/p>\n<p>This blog discussed international in <a href=\"https:\/\/fundamentalis.com\/?p=19380\">this post<\/a> on April 5th, 2026, <a href=\"https:\/\/fundamentalis.com\/?p=19030\">this post<\/a> on December 4th, &#8217;25, where Japan is discussed, and November 14, &#8217;25 <a href=\"https:\/\/fundamentalis.com\/?p=18961\">in this post<\/a>.<\/p>\n<p>What struck me in the Labor Day blog post <a href=\"https:\/\/fundamentalis.com\/?p=19855\">here<\/a>, the international, 5-year, &#8220;annual&#8221; returns are still &#8211; mostly &#8211; under 10%. If a comparison were run between the 1,3,5, 10, and 15-year annual returns between the US and international asset classes, the US returns for the SP 500, Nasdaq, Nasdaq 100, would blow away international, for the 5, 10 and 15-year periods. Is that a fair comparison &#8211; probably not, but we could reasonably assume that any international rally should be able to last 5 years, particularly after a 20-year dry spell between 2005 and 2025.<\/p>\n<p>Two caveats around international investing: most investors who were around for the late 1990&#8217;s and then the 2000&#8217;s, saw a 6-year period where international and Emerging Markets had relatively healthy returns, ending in 2006, and heavily influenced by China&#8217;s +15% annual growth. The US dollar will play a role in determining international returns, and with a fed rate hike scheduled for this week, it will be interesting to see what happens to the dollar after 1 pm central time on September 16th.<\/p>\n<p>The point being &#8211; like any historical comparison &#8211; comparing today vs 20 years ago requires adjusting for different conditions.<\/p>\n<p>None of this is advice or a recommendation but only an opinion. Past performance is no guarantee of future results. None of this information may be updated, and if updated, may not be done in a timely fashion.<\/p>\n<p>Thanks for reading.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This is the CME&#8217;s fed funds futures probability bar chart for this coming FOMC announcement on Wednesday, September 16th, 2026,&hellip;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[102,305,163,214],"tags":[],"class_list":["post-19894","post","type-post","status-publish","format-standard","hentry","category-emerging-markets","category-federal-reserve","category-fomc-meeting","category-international-non-us"],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/19894","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19894"}],"version-history":[{"count":10,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/19894\/revisions"}],"predecessor-version":[{"id":19909,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/19894\/revisions\/19909"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19894"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19894"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19894"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}