September News Update

Last month we ended with a warning: September would be the most consequential month of 2026 so far. The Fed would decide. Canada would retaliate. Iran would simmer.

Well. All three happened. And Iran did more than simmer.

If you only remember one idea from this month, make it this: the price of borrowing money went up almost everywhere. When that happens, almost everything else — stocks, gold, the ringgit — has to adjust. Let’s walk through it, one chapter at a time. (Numbers are as of 29 September.)

Quick recap. The war started in late February. A peace memo was signed on 17 June. It fell apart in July. By the end of August, tankers were being hit in the Strait of Hormuz again. That was our cliffhanger.

September opened with more of the same. On 2 September, Iran said it struck two oil tankers using what it called an “unauthorised route” through the Strait. On 8 September, the US hit back hard — American forces destroyed five oil tankers linked to Iran’s Revolutionary Guards. Iran answered by firing missiles at US bases in Jordan. Jordan said it shot down 18 of them.

Then the fight spread to the backup plan. Since Hormuz was blocked, Saudi Arabia had been sending oil through its East-West pipeline — a 1,200km pipe that skips the Strait entirely. Around 10-12 September, drones launched from Iraq hit that pipeline and forced it to shut. Think of it like this: the main highway was already closed, and now someone blocked the detour too.

How empty is Hormuz? Before the war, roughly 130 ships crossed every day. In the week of 21-27 September, only 132 crossed the whole week. A full week of traffic now looks like one normal day.

Late in the month came a twist. At the UN General Assembly, Iran’s Foreign Minister offered a seven-day plan: stop the fighting, lift the US naval blockade and oil sanctions, release frozen Iranian money — and Iran reopens Hormuz on day seven. Nuclear talks would come after.

Trump’s answer, in his words: “I reject their proposal.” The US wants nuclear concessions first. Iran wants economic relief first. Same stalemate, new packaging.

Remember in June, when oil crashed to the low $70s and everyone thought the worst was over? Yeah. About that.

Brent crude (the global benchmark oil price) started September in the mid-$90s. After the tanker strikes, it closed above $101 on 9 September — its highest close since May. The Saudi pipeline attack pushed it higher still, to around $108-109 by mid-month.

Then peace talk at the UN cooled things. Brent slipped back to about $104 by 25 September. When Trump rejected Iran’s offer, it jumped about 3-4% in one day to settle at $107.35 on 28 September. It is hovering around $105 as we write. Some good news: Saudi Arabia has repaired the pipeline and oil is flowing through it again.

In America, petrol hit an average of $4.15 a gallon on Labor Day weekend — almost a dollar more than a year ago, and above the old Labor Day record of $3.82 from 2012. That matters, because angry drivers are also voters.

Since March, one question has hung over everything: will Fed Chair Kevin Warsh raise interest rates, or hold? After his hawkish speech at Jackson Hole in August, markets were betting on a hike.

They were right. On 16 September, the Federal Reserve (America’s central bank) raised its key rate by 0.25% to a range of 3.75%-4.00%. It was the first hike since July 2023 — and the vote was unanimous. Nobody dissented.

Warsh did not sugar-coat it: “The plain fact is that inflation is too high and has been too high for too long.” Why is inflation stuck? Look back at Chapter Two. Expensive oil makes everything expensive — transport, food, factory costs.

And it may not be the last hike. 16 of 18 Fed officials expect at least one more increase before the year ends. Markets put the odds of another hike in October at about two in three.

Now the part that quietly matters most. The 10-year US Treasury yield — basically the interest rate the US government pays to borrow for 10 years — crossed 5% on 15 September for the first time since 2007. It closed at 5.18% on 25 September and touched about 5.2% this week. At the end of August it was near 4.8%. This number sets the tone for mortgages, car loans and company borrowing around the world.

Higher rates also make the US dollar more attractive. The dollar index (DXY), which measures the dollar against major currencies, went from a September low of 98.45 (10 September) to a high of 101.11 (24 September), and sits near 100.9 now. Remember that number — it comes back in Chapter Seven.

With a rate hike, $100 oil and 5% yields, you would expect US stocks to fall apart. They didn’t. At least not the tech ones.

In the week to 25 September, the S&P 500 rose 1.2% to 7,743 and the tech-heavy Nasdaq jumped 2.1% to 27,069. The star was Meta, which surged about 13% in one week after showing off new AI agents at its Connect event. Microsoft added 4.5% after launching an upgraded AI assistant.

But look under the hood. In that same week, utilities fell almost 4%, real estate fell 2.3%, and small companies (the Russell 2000) fell 0.8%. These are the businesses that borrow a lot, so higher rates hurt them most. US consumer sentiment also dropped to 48.1 from 51.7 in August — people are feeling the petrol prices.

Then on 28 September, Trump’s rejection of Iran’s offer knocked the S&P 500 down 0.8% to 7,684. That is still not far from the record highs set over the summer.

Next up on the AI scoreboard: Micron, the memory-chip maker, reports on 30 September. Analysts expect about $51 billion in quarterly revenue, with its main memory business up roughly 300% from a year ago. For context, that one quarter would be bigger than the entire yearly economy of many small countries. Last month Nvidia proved AI demand is real. Micron is the next test.

Remember when gold was surging in August, climbing toward $4,600? A war still raging, oil above $100 — surely September would be gold’s month too?

Nope. Gold futures opened September near $4,500 an ounce, peaked around $4,540 on 3 September, and then drifted down. On 28 September gold dropped more than 3% in a single day to $4,185. That is roughly 25% below its record of $5,589 set back in January.

Why? Gold pays you nothing to hold it. No interest, no dividend. When US bonds pay 5% and the dollar is getting stronger, holding a shiny rock that pays zero suddenly feels expensive. The rate hike beat the war.

Bitcoin went the other way, quietly. It sat around $79,700 in late August and was near $84,400 on 25 September — up about 6% in a month. But zoom out: it is still about a third below its all-time high of $126,198 from October 2025.

Last month’s trade cliffhanger: on 22 August, the US slapped an extra 50% tariff (a tax on imports) on a wide range of Canadian goods — metals, farm products, electronics and more. Would Canada fold or fight?

It fought. On 8 September, Canada put its own tariffs of 15%, 25% and 50% on about C$27.6 billion of American imports, including steel, dairy, household appliances and farm equipment.

The bigger backdrop: at the 1 July review of the US-Mexico-Canada trade agreement, the US refused to extend it for another 16 years. The deal still runs until 2036, but it now has to be reviewed every single year. Imagine a tenancy agreement where the landlord can renegotiate every January. Not great for planning.

Here is the strange thing. Malaysia’s economy is actually doing well. GDP grew 6% in the second quarter, and inflation was just 1.8% in July. On 3 September, Bank Negara kept the Overnight Policy Rate (OPR) at 2.75% for the seventh meeting in a row. So your home loan and car loan instalments did not change.

But markets don’t only look at home. They look at Washington too.

The KLCI: Our main stock index pushed through 1,750 in mid-August and ended the month around 1,726. In September it slid steadily — 1,672 by 25 September, then a 1.56% drop on 29 September to 1,643.96, its steepest one-day fall in nearly seven months and its lowest level since December 2025. That is roughly 5% down in a month and about 2% down for the year. Foreign funds sold a net RM1.01 billion of Malaysian shares in September (to 25 September), bringing the year’s total to RM5.47 billion.

Why are foreigners leaving? Go back to Chapter Three. If a fund can earn 5% in safe US bonds, it needs a very good reason to hold riskier emerging-market shares.

The ringgit: Same story. As the dollar strengthened, the ringgit fell about 1.2% in September — the weakest performer in Asia — to around RM4.08 per US dollar. That is still much stronger than a couple of years ago, and some big banks (MUFG, SMBC) expect it to recover to RM4.00-4.03 by year-end. Being an oil exporter helps us when crude is expensive.

At the pump: If you use BUDI95, you probably didn’t notice anything — still RM1.99. But the unsubsidised price tells the real story. In just three weeks, it jumped 80 sen.

Do the maths. The gap between the market RON95 price and BUDI95 is now RM2.58 per litre — that is what the government is covering for you. Use your full 300-litre quota and that is up to RM774 a month of subsidy for one person. Now multiply that by millions of drivers.

1. US jobs report (2 October) — Economists expect only about 90,000 new jobs, down from 162,000 in August. A weak number could make the Fed think twice about hiking again. A strong one makes an October hike more likely.

2. Malaysia Budget 2027 (9 October) — The big one for us. Watch for changes to BUDI95 and diesel subsidies, tax relief, and how the government plans to pay for the fuel shield with oil above $100.

3. Iran’s next move — Trump said no to the seven-day plan. Does Iran sweeten the offer, or do the tanker strikes resume? With US midterm elections on 3 November, the pressure to bring petrol prices down is only going to grow.

4. The Fed’s October meeting (late October) — Markets see roughly a two-in-three chance of a second hike. If it happens, expect more pressure on the ringgit, the KLCI and gold.

5. Big Tech earnings season (late October) — Microsoft, Google, Meta, Amazon and Apple all report. They are the ones holding the US market up. If their numbers wobble, there is not much else to catch the fall.

September was the month money got expensive. October will tell us who can afford it. Budget day. Fed day. Iran’s move. Stay sharp.