The OECD has flagged surging government bond yields as a major concern, warning that higher borrowing costs are tightening public budgets just as growth slows and inflation picks up again. The Paris-based group expects the global economy to grow 2.9% in 2026 and 3% in 2027. Annualised growth cooled from 3.6% in the second half of last year to 2.6% in the first half of 2026. G20 inflation is forecast to average 4.1% this year before easing to 3.6% next year. Secretary-General Mathias Cormann said the buffers that absorbed the Middle East energy shock are being used up. The OECD also expects the US and European central banks to raise interest rates again.
The Federal Reserve raised its benchmark interest rate by a quarter point on September 16, lifting the target range to 3.75% to 4% in a unanimous 12-0 vote. It was the first increase in more than three years and the first policy move under Chair Kevin Warsh, and the September dot plot signals one more hike this year. Energy is the main driver: Brent settled at $107.63 a barrel on September 10, West Texas Intermediate settled at $102.48, and diesel hit a record $5.94 a gallon. Higher fuel costs flow into trucking, rail, air cargo and warehouse operations, and logistics firms report that customers are already asking to renegotiate annual contracts.
Stellantis India has taken full ownership of its manufacturing operations at Thiruvallur in Tamil Nadu after buying the remaining stake held by Hindustan Motor Finance Corporation, part of the CK Birla Group. The plant has built vehicles for the group since 2017. Stellantis plans to raise annual output from about 18,000 units in 2026 to more than 50,000 by 2027, a rise of more than 160 per cent, while more than doubling its direct workforce. Export demand and India's role as a low-cost base for Africa, the Middle East and Southeast Asia are driving the plan. Component suppliers with approvals for the site are expected to add machines and staff ahead of the ramp.
State-owned China Rare Earth Group is in talks to acquire Shenghe Resources, two sources told Reuters, in a deal that would tighten Beijing's control over rare earth mining, separation and magnet supply chains. Shenghe holds a stake in MP Materials, one of the few Western producers of rare earth concentrates, so the transaction would give China's state group a foothold inside a United States supplier. Rare earth magnets are used in electric vehicle motors, wind turbines, pumps, robotics and defense systems. Separately, research from property agency JLL showed cross-border investment in commercial real estate rose 56 percent to 71.8 billion dollars in the first half of the year, led by deals in Asia and Europe.
The Federal Reserve raised its benchmark interest rate by a quarter point this week, the first increase in more than three years, with all 12 members of the Federal Open Market Committee voting for it. The move lifts the overnight funds rate to 3.75% to 4%. Chair Kevin Warsh said inflation is too high and has been for too long, but warned the decision will not immediately lower prices. Brent crude has traded above $100 a barrel during September, and benchmark Treasury yields hit a 19-year peak. Policymakers see headline inflation at 3.7% this year and do not expect to reach their 2% target until 2029.
Global exports of refined fuels such as diesel and gasoline were about 25% lower in late July and August than a year earlier, according to Deloitte's weekly global economic update, which estimates that roughly 75% of the decline came from the Middle East or Russia. Iranian strikes destroyed refining capacity in the Middle East, Ukrainian drones have hit Russian plants, and product tankers cannot pass the Strait of Hormuz while the conflict continues. Saudi Arabia is repairing an attacked pipeline, a job expected to take weeks. West Texas Intermediate traded near $107 a barrel, the 30-year Treasury yield reached 5.17% and the S&P 500 slipped 0.3%.
IMTS 2026, the largest manufacturing technology show in the Western Hemisphere, opened Monday at McCormick Place in Chicago with 1,788 exhibiting companies, including 400 first-time exhibitors. The show covers 1.17 million square feet and runs through September 19, with attendance on pace to top 90,000 visitors from all 50 U.S. states and 113 countries. Organizers estimate a $250 million economic impact for Chicago and Illinois. Exhibitors are focused on robotic machining, cobots and AI-driven production, betting that automation will close a gap: surveys show fewer than 40 percent of U.S. job shops use any automation at all.
The Federal Reserve raised its benchmark interest rate on Wednesday, its first increase in more than three years, and signaled that another move is likely before the end of 2026. Officials pointed to inflation that has stayed elevated for 65 months, pushed higher by oil prices after the closure of the Strait of Hormuz. Chairman Kevin Warsh has argued the central bank must show it can return inflation to target. Treasury yields had already climbed toward 5 percent before the decision. The hike lifts costs on credit cards, auto loans and variable-rate debt, and raises financing costs for companies funding data centers and factories.
The 10-year US Treasury yield rose above 5% on Monday for the first time in nearly three years, as energy prices tied to Middle East supply disruptions kept inflation pressure high. The Federal Reserve meets on September 15-16, and traders now price roughly an 80% to 90% chance of a rate increase, up sharply from a week earlier. Goldman Sachs chief economist David Mericle wrote that pricing is high enough that the committee will likely want to avoid the market reaction that would follow from holding steady. Asian shares and US stocks fell as investors weighed higher oil, higher yields and slower AI spending.
Saudi oil buyers and traders say the kingdom will run out of crude stocks available for export if its East-West pipeline to the Red Sea is not restarted within days. The line has been shut since attacks last week, and Iran denies involvement. Brent crude crossed $107 a barrel on Monday, near a four-month high, while US diesel has hit a record $6 a gallon. The White House is weighing emergency powers to expand refining capacity, and August inflation data has hardened expectations of a Fed rate rise.