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The Reserve Bank of Australia (RBA) unanimously raised its cash rate target by 25 basis points to 4.60% at its September 2026 meeting, matching market expectations. The move marks the central bank’s fourth rate increase this year, pushing borrowing costs to their highest level since 2011.
US President Donald Trump had tried to pressure the Fed to lower rates, but it voted unanimously to raise them instead. In response, Trump is now threatening to end trade with countries the US has a trade deficit with – namely Canada, Mexico and the European Union.
Published On 17 Sep 202617 Sep 2026
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Private Credit Fed Rate Hike Squeezes an Already Stressed Private Credit Sector
Fed rate hikes threaten to further strain direct lenders as private credit default rates hit record highs.
The private credit industry keeps insisting it’s fine. The data keeps suggesting otherwise, and Wednesday’s interest rate hike from the Federal Reserve isn’t going to help the argument.
The Federal Open Market Committee officially raised the federal funds target range by 25 basis points to 3.75%-4.00%. The decision, which was unanimous among the 12 board members, marks the first rate hike since 2023.
“Whenever the Fed increases rates, the pressure on the liability side becomes very high,” David Yahalomi, chief operating officer and co-founder of Tel Aviv-based loan-management platform Hypercore, said in an email.
Companies that borrow through direct lending typically carry floating-rate debt, meaning their interest costs rise automatically whenever the U.S. central bank moves rates. The hike officially pushes up borrowing expenses at a moment when defaults are already climbing to levels not seen before.
“In the event of a prime rate increase, this structure shrinks [private credit portfolio company] margins,” Yahalomi added. And the squeeze is already showing up in the numbers.
A Fitch Ratings report from Monday shows that the U.S. Private Credit Default Rate, or PCDR, hit 6.3% for the 12 months ended in August. That’s up from 6.1% in July. The rate has now held at or above 6.0% since April. Here’s the credit rating agency’s breakdown of the findings:
While the overall PCDR blends middle-market CLO ratings (MCO) and insurer-monitored private ratings (PMR), August’s rise was driven by record stress in MCOs (5.6%), even as PMR rates eased slightly to an elevated 8.5%.
Harvey Tian, head of loan operations at Suntera Fund Services, said a size-weighted view changes how PIK interest should be read as well.
“Once the prime rate goes up, the terms on all the rates will increase, and it will definitely put pressure on the borrower side — the ones paying cash interest,” Tian told Global Finance on a call.
Loans structured with PIK options, however, aren’t paying cash interest at all, he noted. That insulates that particular pool of borrowers from a higher interest rate.
“I don’t see a huge effect on the underlying portfolio of PIK borrowers if it’s a one-time hike,” Tian said of Wednesday’s Fed announcement. A quarter-point increase would phase into the PIK rate structure over time rather than land all at once.
Multiple hikes are a different story, given the inflationary pressures caused by a worsening U.S.-Iran conflict.
Anthony Noto covers corporate finance and private credit. Contact him at anoto@gfmag.com.
The Trump administration is proposing a dramatic overhaul of the once-a-decade U.S. Census head count that could leave out millions of immigrants based on status and key racial and ethnic data, jeopardizing the allocation of resources and the country’s voting map.
The potential changes, announced Wednesday, would exclude undocumented immigrants, asylum seekers and anyone without permanent status. Certain demographic questions from the traditional questionnaire would also be eliminated.
It echoes Trump’s previous idea to add a citizenship question to the 2030 census.
The U.S. Census Bureau, in a post on the Federal Register website, argued “illegal aliens (among others) should not be included in the apportionment count, as they are not true inhabitants, members of the body politic, or persons with a ‘usual residence’ in the United States due to their lack of a sufficient tie and allegiance to the United States.”
The census also “should be colorblind and should not be distorted in any way by questions about immaterial personal characteristics, such as race,” the agency said. It also is considering nixing questions related to people who identify as part of the LGBTQ+ community.
These changes would harm the quality of the data, said Beth Jarosz, a data researcher and vice president of the Association of Public Data Users. She called the proposals “unprecedented.”
“Not counting all of the people who reside here is actually where the real threat is,” Jarosz said. “If you think about all of the ways that census data are used.”
Census figures are traditionally used for an “apportionment count” to determine how many seats each state will have in the U.S. House of Representatives. That count also determines the number of votes in the Electoral College.
“You can imagine if we have undercounts or if we have people counted in the wrong place,” Jarosz said. “Then their political power or their political representation gets diluted.”
Historically, the decennial census has not sought to conduct a full count of people by citizenship status, she added. It may come up in the Census’ periodic American Community Survey.
Getting an accurate count of immigrants of various statuses is useful when assigning resources for public health emergencies or natural or human-made disasters.
“If you don’t have a count of everyone who’s there, you’re not going to have the resources you need,” Jarosz said. “And that puts everybody at risk.”
Race-related questions have been on the once-a-decade census since 1790. Starting in 2000, the U.S. census began allowing people to identify by more than one race. A 2015 Pew Research Center study found that multiracial people in the U.S. were growing at a rate three times faster than the general population. By 2020, 33.8 million people in the U.S. identified as being more than one race, according to the census.
Race and ethnicity data is essential for researchers who gauge discrimination, crime rates and wealth gaps in communities of color.
Manjusha Kulkarni is co-founder of Stop AAPI Hate and executive director of AAPI Equity Alliance, two advocacy groups that rely on census counts of Asian Americans and Pacific Islanders. The proposed changes would have tremendous impact on the populations they serve, she said.
“It also seeks to exclude important demographic data from millions that enables lawmakers, health care providers, public safety officials and community advocates — really anyone who cares about the health, safety and well-being of all Americans — from having the necessary data to keep us safe and healthy,” Kulkarni said via text message.
Dropping race and ethnicity data as well as some immigrants sends a message that these communities don’t matter, she added.
Collecting data for the 2030 Census with all these missing elements would be detrimental, Jarosz said.
“These changes are like trying to land an airplane when you are in thick fog and someone has thrown paint across the front window and your instruments are also not working,” she said.
Tang writes for the Associated Press.
Prices spiked as attacks on oil tankers escalated in the Middle East.
Published On 10 Sep 202610 Sep 2026
Oil prices have increased by four percent, with benchmark Brent crude hitting $105 a barrel after the biggest rise in attacks on shipping since the Iran war began spurred trader concerns about further supply disruptions.
Brent crude futures were up $4.05, or four percent, at $105.26 a barrel by 1215 GMT on Thursday. United States oil topped $100 a barrel for the first time since May, as West Texas Intermediate crude futures CLc1 rose $3.99, or 4.15 percent, to $100.04.
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Brent prices have surged by more than 30 percent from lows touched in early August, as a permanent agreement between the US and Iran to cease attacks never materialised and fighting resumed.
Iran-aligned Houthis seized control of Yemen’s port of Mocha on Thursday, further threatening Red Sea traffic, while Gulf traffic remains restricted through the Strait of Hormuz as tanker attacks in the region have intensified in recent days.
“The recent run-up in prices lays bare the market’s approach: this conflict will last longer than anticipated even a month ago, let alone at the beginning of the summer. If oil supply and exports are diminished, the oil balance remains tight and prices remain elevated,” PVM analyst John Evans said.
Iran said it had attacked 10 ships near the Strait of Hormuz on Wednesday, after the US hit five Iranian oil tankers. Iran’s Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.
While fears of prolonged and more severe supply disruptions in the Gulf have lifted Brent above $100, analysts say the durability of the rally will hinge on China.
China, the world’s largest crude importer, has stepped up purchases in recent weeks after months of subdued demand, boosting physical crude markets, ING analysts said in a note.
If Chinese buying continues to recover, it could amplify the impact of any supply disruptions and drive prices higher, while a pullback in imports could temper market gains, ING said.
“For months, the bearish case rested on soft Chinese demand,” said David Jorbenaze, global oil market lead at commodities information provider, ICIS.
Rising oil prices have worsened worries about inflation and cranked up pressure within the bond market, helping to lower stocks again on Wall Street.
The S&P 500 fell 0.6 percent and is on track for a fourth straight loss.
The increase in oil prices has pushed the price for a gallon of regular petrol to an average of nearly $4.28 across the US, according to the American Automobile Association. That is not only costing more at the pump but also through higher prices for all kinds of products that move by truck to store shelves.
Following Thursday’s reports, traders are betting on a close to 70 percent chance the Fed will raise the federal funds rate at its meeting next week. That’s up from the 61 percent probability seen the day before, according to data from CME Group. That’s also despite President Donald Trump’s consistent lobbying for interest rates to go lower rather than higher.
Frankfurt will almost certainly move on Thursday.
Market odds put a quarter-point hike at close to certainty, which would lift the European Central Bank’s deposit rate from 2.25% to 2.5%.
What makes this a difficult call is not whether the ECB acts, but why, and whether the reasoning survives contact with the data.
The path here has been compressed as the ECB raised rates on 11 June for the first time in three years, lifting the deposit rate from 2% to 2.25% in response to the energy shock from the Iran war, and then held rates in July while Christine Lagarde pointed hawkishly towards September.
August’s inflation figures removed any remaining doubt with eurozone inflation hitting 3.3%, up from 2.9% in July and the highest since September 2023, as energy inflation surged to 14.3% from 10.3%.
Look beneath the headline inflation and the picture inverts.
Core inflation, which strips out energy, food, alcohol and tobacco, actually fell to 2.4% from 2.5%. Services inflation, the component most closely tied to wages and domestic demand, dropped to 3% from 3.3%.
In other words, there is still little evidence that expensive energy is feeding through into everything else. That is what economists mean by “second-round effects”, and their absence is the strongest argument against tightening.
The ECB’s own research also supports the distinction.
In a paper published on Tuesday, ECB economists found that adverse energy supply factors, driven by geopolitical tensions, accounted for around 90% of the rise in energy inflation between January and May.
“This time the energy supply shock dominates, while demand and public policy stimulus have minor roles,” the economists wrote, adding that “these differences are key to explaining why monetary policy responses differ.”
The 2021-22 surge, by contrast, came from “a combination of large and unprecedented supply and demand-side factors,” which is why the ECB then “raised interest rates forcefully and persistently” rather than gradually.
The national spread across the EU further underlines how uneven this is.
August inflation ran at 4.5% in Spain, 2.9% in Germany and 2.7% in France, three economies facing the same energy shock with very different results, all governed by one interest rate.
Economic growth is the other complication.
The eurozone has proved more resilient than expected, which ING attributes partly to luck, partly to Asian competitors suffering more from the closure of the Strait of Hormuz and partly to fiscal stimulus. However, resilience does not mean the growth could not, or should not, accelerate.
ING characterises Thursday’s expected move as “another insurance rate hike”, or “a dovish rate hike,” noting that even at 2.5% the deposit rate sits within the range the ECB itself considers neutral.
Going further would mean deciding restrictive policy is required, which would be a different judgement entirely.
The ECB is not acting alone, and that matters for the euro.
The Federal Reserve meets on 15 and 16 September, with Chair Kevin Warsh having used his first Jackson Hole address to argue that financial conditions are not restrictive and underlying inflation has not improved.
Investors had put the odds of a US hike at roughly one in three before those remarks, but now price a 60% chance the Fed hikes the target range from 3.5%-3.75% to 3.75%-4%.
The Bank of Japan follows on 17 and 18 September, with markets pricing an 80% to 90% chance of a move to 1.25%.
On the other hand, the Bank of England is expected to hold rates at 3.75% on 17 September as it currently maintains a much higher interest rate than the rest.
If the Fed were to hike while the ECB held, the dollar would strengthen against the euro and that would cut both ways for Frankfurt.
A weaker euro makes European exports more competitive, but it also makes imports dearer, and since oil and gas are priced in dollars, it would push up precisely the energy costs driving the inflation problem in the first place.
Overall, we can assume a September rate hike is a done deal for the ECB but we can also project that it won’t solve the central bank’s current dilemma of raising borrowing costs against an inflation it cannot reach, while withdrawing support an economy could still use.
The United States economy has added 162,000 jobs in August, with large gains in local government education and food services.
The unemployment rate remained unchanged, according to the monthly jobs report released by the US Department of Labor’s Bureau of Labor Statistics (BLS) on Friday.
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The data was well above analysts’ expectations. Economists polled by Reuters had forecast 56,000 gains, the Wall Street Journal forecast 53,000, and Bloomberg had forecast 55,000, following a loss of 23,000 in July.
Local government education, or public schools, accounted for nearly 42,000 of the jobs added as the 2026–27 school year begins across much of the US. Teachers typically fall off payrolls during the summer months when school is not in session.
Food service jobs also saw large increases, with the sector adding 59,000 jobs for the month of August compared with the month prior.
There were also gains in construction, which added 22,000 jobs, and healthcare, which added 12,000.
The information sector, which accounts for industries like data processing, web hosting, publishing, broadcasting and telecommunications, fell by 23,000, with notable layoffs at companies including Scripps TV and Zillow, which fall under the umbrella of these industries.
The financial activities sector, which accounts for industries like insurance, commercial banking and real estate, dropped by 12,000.
The data comes in sharp contrast to the ADP national employment report, which tracks private payrolls and found 38,000 jobs added across the US economy.
Meanwhile, the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) report released on Tuesday revealed job openings were slightly changed, with 7.3 million in July, up from 7.2 million the previous month, while total separations fell to 5.1 million in July from 5.3 million in June.
The move in job gains comes ahead of the US Federal Reserve’s policy meeting later this month, where the central bank will vote on interest rates. Amid the job gains, CME Group’s FedWatch, which tracks the likelihood of monetary policy decisions, had a 60 percent chance of a 25 basis point rate increase to 3.75–4.00 percent, up from 49 percent on Thursday.
US President Donald Trump was quick to comment on the jobs report and push for rate cuts.
“Lower the interest rates because the U.S.A. is a much stronger credit than it was a short time ago!” he said in a post on his social media platform Truth Social.
He also ramped up threats to cut off trade with nations that the US has a deficit with if the central bank does not cut rates.
Despite a strong jobs report, US markets are trending downwards. The Nasdaq is down 0.2 percent, the Dow Jones Industrial Average is down 0.5 percent, and the S&P 500 is down 0.3 percent amid Trump’s comments.
Meanwhile, Canada released its jobs report amid the ongoing trade dispute with the US. The Canadian economy lost 41,700 jobs, according to Statistics Canada, with the unemployment rate holding steady at 6.4 percent.
“We expect the economy will continue struggling to create jobs in the near term as mounting headwinds from new US-Canada tariffs, greater uncertainty from a flare-up in the trade war, and the ongoing Iran conflict and a shrinking population weigh on hiring,” Tony Stillo, director of Canada Economics at Oxford Economics, said in a note provided to Al Jazeera.
Asian stocks fell on Monday as hawkish comments from Federal Reserve boss Kevin Warsh saw investors ramp up bets on a US interest rate hike, while oil prices spiked after a fresh flare-up in the US-Iran war.
With inflation remaining stubbornly high – largely on the back of elevated energy costs – the US central bank has come under pressure to act, and Warsh’s refusal to provide guidance has stoked uncertainty.
But in a highly anticipated speech at the Jackson Hole symposium of central bankers and economists in Wyoming, he left traders with few doubts that he was ready to increase borrowing costs.
Warsh said: “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”
He called the spike in inflation – currently at 3.7% and nearly double the Fed’s 2% target – “concerning”, and said he would be “hard-pressed” to describe current financial conditions as “restrictive”, a potential hint that rate hikes could be on the horizon.
However, he stopped short of saying he would support a hike, adding: “I stand here today committed to a discipline, not to a decision.”
All three main indexes on Wall Street fell Friday. Yields on short-term US Treasury bonds – which reflect monetary policy expectations – jumped, and the dollar rallied against its peers. Gold, which benefits from lower interest rates, fell.
And Asia followed suit, with tech firms – which rely on borrowing to fuel their huge AI investments – leading the way down.
Tokyo, Seoul, Hong Kong, Shanghai, Taipei and Jakarta were all down, though Singapore and Wellington edged up.
Focus will now turn to a string of crucial data releases over the next two weeks before the Fed makes its decision, with jobs up this week and the consumer price index (CPI) next week.
“Should we get an inline payrolls print that does not give the Fed too much to work with, next week’s core CPI report will become the major decider for the market’s Fed belief system,” wrote Chris Weston at Pepperstone.
“The volatility priced around that outcome across rates, forex and equities could therefore be significant.”
The Fed’s battle against inflation has been hobbled by the Iran war, which has pushed oil prices higher.
And after a run lower for most of last week, they spiked again on Monday, a day after the United States said it had attacked Iranian rocket launchers on a small island in the Strait of Hormuz, its first strikes on the country in a month.
The attack prompted Tehran to retaliate by hitting US military targets in Jordan. Both main crude contracts rose more than 2% on Monday.
The exchange came shortly after the US-Iran war hit the six-month mark, and at a time when hostilities had been subsiding.
The news revived concerns about the conflict, with attempts and peace talks appearing to be going nowhere and the strait – through which a fifth of global crude and gas passes – largely closed.
US officials this month vowed the “economic asphyxiation” of Iran to make it open the waterway.
“Hormuz is once again threatening to put a floor under oil just as Warsh is putting a ceiling on how much inflation patience markets should assume from the Fed,” said Quintex Intel’s Stephen Innes.
“For oil traders, (the) move is another reminder of how quickly the geopolitical premium can return.
“Physical flows through Hormuz have improved materially from their worst levels, which is precisely why crude had started giving back some of the fear premium, but the latest exchange shows how fragile that progress remains and how quickly the shipping story can be pushed back onto the trading desk.”
Additional sources • AFP