Markets began in 2026 expecting rate cuts, but they may now end up with the opposite. After the Federal Reserve held its benchmark at 3.50-3.75% in July, attention has swung to September, where futures now put the odds of a quarter-point hike near 60%, the single most likely outcome, though far from a certainty. It is a striking reversal for an easing cycle that never arrived.

The shift has real drivers. Inflation remains stubbornly elevated, an oil shock from the conflict with Iran has lifted energy prices, Treasury yields have climbed to multi-year highs, and three policymakers broke ranks in July to vote for an immediate hike. A resilient economy removes the usual excuse for caution, though some banks, J.P. Morgan among them, still expect no move before 2027.

What unsettles investors most is the silence at the top. New chair Kevin Warsh has made plain his aversion to forward guidance, refusing to telegraph the Fed's next step and launching a sweeping review of how the bank communicates, with the explicit aim of doing less of it. His quiet is not indecision but doctrine: Warsh holds that pre-committing distorts markets and boxes the Fed in, and he means to break the habit.

For markets, that changes the game. Stripped of a roadmap, investors must price a wider range of outcomes, and every inflation and jobs report becomes a potential shock. A September hike would lift the risk-free rate again, pressuring stretched equity valuations and the long-duration growth names most sensitive to rates. The Fed once told markets where it was heading. Under Warsh, it will not. September is the first real test of whether investors can navigate the fog he has deliberately left them in.

- Neev Dave

The US economy unexpectedly lost 23,000 jobs in July, signalling that the labour market may be losing momentum after a stronger start to the year. The figure fell well below economists' expectations of 80,000 new jobs and followed significant downward revisions to employment data for May and June. While healthcare continued to add jobs, employment declined across education, retail and financial services. Although the unemployment rate edged down to 4.1%, this was largely driven by fewer people participating in the labour force rather than stronger hiring, suggesting underlying labour market conditions have weakened.

The disappointing figures immediately reshaped expectations for US monetary policy. Investors scaled back the likelihood of another Federal Reserve interest rate increase, with Treasury yields and the US dollar falling as markets reassessed the outlook. Since a weaker labour market reduces the risk of wage-driven inflation by easing pressure on employers to compete for workers, this potentially allows the Fed to keep interest rates unchanged. However, policymakers remain focused on inflation, and upcoming consumer price data is expected to carry greater weight than employment figures in determining whether further monetary tightening is required.

More broadly, the report highlights the delicate balancing act facing the Federal Reserve. Its dual mandate requires it to maintain both price stability and maximum employment, meaning signs of a cooling labour market strengthen the case for pausing rate increases. However, inflationary pressures linked to higher energy prices and geopolitical tensions continue to complicate that decision. The July payrolls report therefore reinforces that financial markets remain highly sensitive to incoming economic data, with each release shaping expectations for interest rates, borrowing costs and the broader outlook for the US economy.

- Muthu Ramanathan

African stock markets have been the face of bull runs in 2026. Just two months ago, Nigeria’s stock exchange (NGX) surpassed South Korea’s KOPSI to become the best-performing stock market worldwide in dollar terms. Since then, other markets in the region have joined the Giants of Africa in achieving significant milestones.

Currently, multiple African stock markets are outperforming the S&P 500 in US dollar terms. The index is up 12.42% YTD thus far. As for African stocks, Nigeria is up 66.8%, Zimbabwe 68.5%, Ghana 57.6%, Tunisia 46.3%, and Tanzania 40.5% (all YTD). As of mid-2026, 11 out of 17 tracked exchanges in Africa have beaten Wall Street benchmarks, carried by major rallies in Nigeria and Zimbabwe.

Key drivers of this growth include macroeconomic reforms – such as currency stabilisation policies and controlled inflation, which boosted foreign investor confidence. Nigeria, for example, lifted energy subsidies, is currently working towards FX Market Unification, and is conducting a comprehensive fiscal and tax overhaul to reduce oil revenue dependency. Sector momentum - strong corporate earnings across banking, mining, telecommunications, and agribusiness. Strategic resilience - heightened local institutional participation and USD-denominated safe-haven assets (such as Zimbabwe's VFEX listings) reducing foreign exchange exposure.

More broadly, the performance of African equity markets highlights the growing investment opportunities across frontier economies. While challenges remain, including political uncertainty, currency volatility and structural weaknesses, recent reforms and improving corporate fundamentals are strengthening investor confidence. For global investors seeking diversification beyond traditional markets, Africa’s improving macroeconomic foundations and expanding capital markets suggest the continent may play an increasingly important role in the next phase of emerging market growth.

- Emmanuel Chukwuani

Until next time,

The Long and Short

Markets, Made Sense