2026 US Economic Outlook (Gemini) Updated September 26
Week 4 of September 2026: Latest Topics in the US Economy
1. Dollar surges across the board on speculation of additional rate hikes, USD/JPY jumps to the 159 range—Long-term interest rates at highest level since 2007
Following the FOMC meeting on September 16, where the policy rate was raised to 3.75–4.00%, market caution remained high. Speculation that the Fed might move to raise rates again in October accelerated dollar buying. In the New York market on September 24, the USD/JPY pair briefly weakened to 158.60 yen before surging to close at 159.04 yen, marking a further decline in the yen compared to the previous week (156 yen range as of September 18). The US 10-year Treasury yield also rose to a peak of 5.15%, recording its highest level since 2007.
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Robust US economic conditions and expectations for hawkish monetary policy are supporting the ‘strong dollar, high interest rate’ combination.
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The difficulty in predicting the pace of additional rate hikes by the Bank of Japan (a 7-2 split vote in September) continues to influence the yen’s depreciation.
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The 158 to 159 yen range is at the high end of the yen’s depreciation phase since the start of 2026.
How to read the phase: A week where market interest shifted from the ‘implementation’ of rate hikes to the ‘next move.’ The market continues to be driven by policy interest rate differentials, with hawkish Fed expectations being priced in ahead of time, combined with the Bank of Japan’s cautious stance, strengthening downward pressure on the yen.
2. US-China summit held for the first time in 4 months, but with ‘few results’—Markets feel relieved instead
President Trump and President Xi Jinping held a summit at the White House on September 24, the first in four months since the Beijing talks in May. While topics such as Taiwan, AI security, and the Iran issue were reportedly discussed, there were few in-depth remarks, and it was not considered a ‘substantive meeting.’
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The stock market on the day reacted with limited movement, with the S&P 500 at -0.06%, the Dow Jones Industrial Average at -0.31%, and the Nasdaq 100 at +0.03%, remaining almost flat.
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The market viewed the ‘avoidance of a full-scale trade war’ and the ‘transition from uncertain confrontation to predictable confrontation’ as positive factors.
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Asian stocks, European futures, and grain futures reacted positively around the time of the summit.
How to read the phase: While there were no major surprises in the content of the talks, the fact that the ‘worst-case scenario was averted’ served as a source of relief; it was a week where low expectations worked in the market’s favor. It is important to note that fundamental issues such as Taiwan, AI, and Iran were merely postponed.
3. Crude oil falls back on signs of resumed US-Iran exports, AI semiconductor investment continues to expand
WTI crude oil fell back from a peak of around $97 per barrel to around $94 on September 24. Signs that the US and Iran are in talks to resume crude oil exports from the Persian Gulf were seen as a factor, and the price is expected to fall by about 2% for the week. While geopolitical risks themselves have not been resolved, supply concerns have receded slightly.
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The Atlanta Fed’s GDPNow maintains a high growth rate forecast for the third quarter of 2026 at +5.1% (as of September 16, revised upward from +4.4% on September 10).
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Nvidia has agreed to over 60 AI-related investments since the start of 2026 (a pace exceeding the approximately 90 investments for the full year of 2025).
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Elon Musk revealed plans for xAI’s ‘Colossus 2’ data center to nearly double its use of Nvidia’s GB300 chips within the year.
How to read the phase: Crude oil is falling back not due to a ‘retreat’ in geopolitical risk, but due to a more concrete factor: ‘signs of resumed exports,’ which, if realized, leaves room for further declines. Meanwhile, AI-related capital investment continues to expand regardless of oil and interest rate trends, which is one factor supporting the ‘strength of the real economy.’
3 pieces of action advice for Japanese individuals to take now
1. USD/JPY in the 159 range: Preparing for sudden exchange rate fluctuations
Due to expectations of additional Fed rate hikes and the Bank of Japan’s cautious stance, the USD/JPY remains in a high range even during the 2026 yen depreciation phase. As the market is prone to establishing a clear direction, it is a phase where one must also be wary of the risk of a sudden reversal.
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For new purchases of foreign currency-denominated assets, assume a range of 155-160 yen and ensure time diversification rather than a lump-sum investment
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For real-demand currency exchanges such as for overseas travel or study abroad, perform them in multiple installments to prepare for sudden rate changes
2. Market welcomes increased ‘predictability of US-China confrontation,’ but beware of postponing fundamental issues
The market welcomed the US-China summit as an ‘avoidance of the worst-case scenario,’ but fundamental points of contention such as Taiwan, AI security, and the Iran issue remain unresolved.
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Continuously check the schedules for the next US-China high-level talks and the announcement of tariff measures
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Avoid excessive optimism by viewing the summit as a ‘temporary easing of tensions’ rather than ‘a summit equals a solution’
3. Closely monitor the PCE inflation indicator announced on September 26 as the most important data
The announcement of the PCE price index, which the Fed uses as a benchmark for its inflation target, is imminent. The most recent figure for July was +3.7% year-on-year, slightly exceeding market expectations (+3.6%), and the focus is on whether this upward trend will continue.
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If the PCE exceeds market expectations, expectations for additional rate hikes from October onwards may strengthen further, potentially increasing pressure for a stronger dollar and weaker yen
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If you are considering a mortgage or foreign currency investment, also check the trends in the 5% range of the US 10-year Treasury yield
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