AFS Markets Blog: Midday 23/09/2026

• Meanwhile in markets, dust off the rocket emojis. The AI boom is back in full force – well, almost – with the Nasdaq and Bloomberg’s Magnificent 7 hitting fresh all-time highs;

• The tech heavy Nasdaq jumped over six percent in the last week – rising at more than double the S&P 500's pace. Our own AI index – containing major chipmakers and hyperscalers – shot up nearly nine percent and now sits less than two percent below its June high. But this rally is a different beast from that in June. The closely watched Korean Kospi index may have surged six percent over the past week, but it remains bogged down in bear market territory as the major memory chip giants fail to reclaim lost ground. Over in the US, the Philadelphia Semiconductor Index rocketed nearly 15 percent over the past week – and while standouts like AMD have hit record highs – the index itself remains in correction territory;

• The real twist is that Bloomberg’s Magnificent 7 index just hit an all-time high – flipping the script from June’s AI rally. Back then, these mega-caps were stuck in correction territory despite peak AI euphoria. Why? More than half of the Magnificent 7 are hyperscalers, pouring massive amounts of debt-funded investment into building out AI infrastructure. In June, concerns over whether these investments would ever pay off were front and center in punters’ minds. Those concerns haven’t disappeared, of course, but sentiment has improved. The shift is clearest in credit markets: over the past month, 5-year USD G-spreads have tightened by 10bps or more for bonds of every major hyperscaler – with AAA-rated Microsoft the sole exception that proves the rule;

• Shifting to some broader market commentary, 2-year UST and Bund yields are up 2bps this morning, while the long end remains steady at yesterday’s close. Meanwhile, energy prices have come further off their morning lows. While Brent crude continues to trade below $100 a barrel, the black stuff is now up half a percent from yesterday’s close. European natural gas prices are also trading marginally above closing prices. Following yesterday’s indirect talks between US and Iranian representatives, we’re now in wait-and-see mode – and while no new talks have been announced just yet, the battlefield remains noticeably quiet;

• Over in central bank land, the recent drop in energy prices has not triggered a significant repricing of rate hike expectations. October meetings for both the ECB and the FOMC continue to be priced at coin flip odds for a hike (according to ESTR forwards and fed funds futures). Over the next 12 months, a total of three more 25bps hikes remain priced in for both central banks;

• Moving on to FX, EURUSD is trading at 1.141 – its lowest level since July. At the same time, USDJPY is slowly moving towards the 158 handle once again – trading roughly 100bps above yesterday’s lows at pixel time. With Japan’s Silver Week holiday drawing to a close tomorrow, we are keeping a close watch on the pair and any possible signs of intervention;

• Looking ahead, there is some Fed- and ECB-speak to keep us busy this afternoon. Tomorrow is more packed, with interest rate decisions by the Swiss National Bank – set to hold its policy rate steady at zero percent – and the Norges Bank – set to deliver a 25bps rate hike. Beyond this, there is even more central bank speak and the high-stakes summit between President Trump and President Xi in Washington. With the truce in the US-China trade war set to expire on November 10th, we are watching closely for any signals regarding an extension.

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