Monday Kick off

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Monday Kick-off Factory Daily letter · 21 Sep 2026 · 7 min read

What we've been watching, themes we've been following, and what's coming up this week

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Risk sentiment improved into the end of last week as oil prices retreated and AI-related equities rebounded into the end of what was a pivotal week for global central banks. The Federal Reserve and Bank of Japan both raised rates (following the European Central Bank's move the previous week) reinforcing the impression of a broader shift towards tighter policy globally. Markets appeared to welcome a move that according to Fed Chair Kevin Warsh "starts to show we're serious" about tackling inflation, interpreting the move as strengthening the Fed's credibility as reflected in the 10-year US Treasury yield falling back below 5.0% and supporting renewed demand for growth stocks. In Japan, however, while Bank of Japan lifted its policy rate to 1.25% as expected, the split vote and cautious guidance weighed on the yen and reinforced expectations that policy normalisation will remain gradual.

Commodity markets were mixed. Oil prices extended their recent pullback, with Brent crude falling to USD 103.69 per barrel as easing supply concerns and diplomatic efforts reduced some of the geopolitical risk premium. Precious metals moved higher supported by ongoing uncertainty and expectations that US rates may be approaching their peak.

Economic data remained broadly resilient. In the United States, retail sales rose 1.2% month-on-month in August, comfortably exceeding expectations and marking the strongest increase in five months. In Europe, Germany's ZEW Economic Sentiment Index improved to its highest level since February, signalling continued, albeit cautious, optimism about the recovery outlook.

Coming up this week of 21 September:

Following last week's shift towards tighter monetary policy from the Federal Reserve and Bank of Japan, investors will be assessing the market fallout and looking to comments from central bank officials and economic activity indicators for further clues on the policy outlook as they continue to navigate developments in energy markets. Key data releases include flash PMI surveys across the euro area, the UK and the US, Germany's Ifo Business Climate Index, consumer confidence readings and US durable goods orders.

· Monday 21 September: US Fed Governor Goolsbee speech; Chicago Fed National Activity Index. Japan markets closed. · Tuesday 22 September: Euro area consumer confidence (flash); US API crude oil inventories; speeches from Fed officials Williams and Jefferson; US ADP employment change. Japan markets closed. · Wednesday 23 September: Flash S&P Global PMIs (manufacturing, services and composite) for the euro area, UK and US; US EIA crude oil and gasoline inventory data. Japan markets closed. · Thursday 24 September: Germany Ifo Business Climate Index; France business and consumer confidence; US current account balance; initial jobless claims; Federal Reserve balance sheet. · Friday 25 September: Germany and UK Gf K consumer confidence; US durable goods orders. China and Taiwan markets closed for the Mid-Autumn Festival.

Themes we’ve been following (summarised below):

· Higher energy: Our charts on WTI crude, diesel, and US and European oil and gas benchmarks; · Central banks: Warsh delivers a hawkish hike; · Higher yields: When might they bite? · Narrowing breadth: Warning signal or healthy rotation? Brief summaries of each theme follow below our exposure model update. As always, we wish our readers a productive week ahead.

The lastest output from our Exposure Optimisation Model

The modelled global equity exposure was reduced to 64%, from 83% the previous, reflecting broad-based downgrades across all three regions.

The aggregate Regime score declined to 64% from 82% last week and was the sole driver of the weaker aggregate…