September's major risks: US, Japanese and European central bank decisions, Anthropic IPO and European and American debt – which will trigger the next round of volatility?

September's major risks: US, Japanese and European central bank decisions, Anthropic IPO and European and American debt – which will trigger the next round of volatility?

With the holiday season over, the market is entering a high-risk period. In September, the Federal Reserve and the Bank of Japan will hold their policy meetings in the same week, the Anthropic IPO may put stress on AI trading, the French budget dispute and the UK's fiscal policy direction are escalating simultaneously, and the energy price shock from the Iran war continues to erode the global growth buffer. The convergence of multiple risk factors makes the trigger point for this round of market volatility difficult to predict.

The Federal Reserve's meeting on September 16th is the most closely watched event recently. The market currently prices in about a 40% probability that the Fed will raise interest rates. Fed Chairman Warsh's remarks are as important as the actual decision, but his consistently brief communication style has confused the market. Meanwhile, the Bank of Japan is expected to announce an interest rate hike on September 18th, and the yield on 10-year Japanese government bonds has approached 3%, the highest level since the mid-1990s. The policy signals from these two central banks within the same week will create a double impact .

In the technology sector, Anthropic is poised to become the next mega-tech company to go public after SpaceX, targeting a fundraising target of up to $100 billion . Analysts warn that if investor enthusiasm for AI falters even briefly, stocks like Nvidia and Microsoft, already priced in AI infrastructure needs, will be the first to be affected, as the market lacks sufficient buffer for differentiation.

Federal Reserve and Bank of Japan: Decisions made in the same week, double volatility risk

The rare overlap in the timing of meetings between the Federal Reserve and the Bank of Japan within the same week has put the market on high alert.

Regarding the Federal Reserve, the market is pricing in a roughly 40% probability of an interest rate hike at its September 16 meeting. Justin Onuekwusi, Chief Investment Officer at St. James's Place, stated, "How the Fed communicates going forward is crucial, as it directly impacts its overall credibility and global interest rate trends."

Furthermore, the recent intervention in the bond market by the U.S. Treasury may dilute market signals, further increasing the difficulty of interpretation. Warsh, who will speak at the Jackson Hole Economic Symposium today (August 28), believes that the tension between the Fed's market-oriented philosophy and its concise communication style remains a major source of market uncertainty.

Regarding the Bank of Japan, the market widely expects it to announce an interest rate hike on September 18. Japan has recently intervened in the foreign exchange market to support the yen, and the yield on 10-year government bonds is approaching 3%, the highest since the mid-1990s.

Hank Calenti, chief global market strategist at SMBC EMEA, said, "The key is the narrative and how hawkish the governor's rhetoric is," noting that subtle changes in wording could alter the shape of the Japanese government bond yield curve.

In addition, the market widely expects the European Central Bank to raise the deposit rate by 25 basis points to 2.50% at its meeting on September 10 , but policymakers have no intention of signaling further tightening of policy.

Due to recent high inflation data in some Eurozone countries and soaring energy prices caused by geopolitical factors, market pricing indicates that the probability of an interest rate hike in September has reached as high as 95%.

Anthropic IPO: A Stress Test of AI Optimism

Following SpaceX's mega-IPO in June, Anthropic is poised to become the next large-scale tech company to go public. Reports indicate it is targeting a fundraising target of $100 billion. Anthropic was valued at $965 billion in May, and if its IPO valuation surpasses $1 trillion, it will rank among the world's largest listed companies.

However, this outlook poses a potential risk to AI deals. Large tech companies are issuing massive amounts of bonds to support capital expenditures, and market digestion pressure is already mounting. Rory Dowie, multi-asset portfolio manager at Marlborough, stated, "In the case of Anthropic and OpenAI, valuations may be extremely inflated," suggesting that both companies' IPO prospects face the risk of overvaluation.

Violeta Todorova, senior research analyst at Leverage Shares, offered a more direct warning: "If investor enthusiasm for this theme wavers even briefly, the market will have no buffer against divergence." She pointed out that the impact will directly affect Nvidia, Microsoft, and all stocks already priced in for AI infrastructure needs, not just newly listed companies.

France and Germany: European debt pressures resurface

The French government will submit its draft budget to the National Assembly in the coming weeks, triggering a political battle. The government will need to balance controlling the deficit with preparing for the 2027 presidential election, in which polls suggest the far right may have an advantage.

Guy Miller, chief economist at Zurich Insurance Group, said:

"There is upside risk to French government bond (OAT) yields, but we do not believe it will be serious enough to shake the overall debt structure of the Eurozone."

Germany is also facing pressure. Chancellor Friedrich Merz is facing a series of state elections, and his approval ratings have remained low due to a series of political missteps. The far-right AfD party may surpass his own party in some elections. This could potentially put pressure on the German bond market.

UK: New Government's Fiscal Approach Faces Test

Newly appointed British Prime Minister Andy Burnham's policies have not yet triggered significant market concerns, but his efforts to promote economic growth amid limited fiscal space could change that. The Labour Party conference in September and the budget in October will be crucial tests for Burnham and the new Chancellor of the Exchequer, John Healey.

UK 10-year borrowing costs remain high, though they have slightly declined from their 18-year peak reached in May. The shadow of the 2022 "mini-budget" crisis may constrain the new government's policy space, and Burnham has stated that it will adhere to UK fiscal rules.

Berenberg senior economist Andrew Wishart warned:

"There is a risk that they might try to cross the line, and I think that would be a mistake."

The Iran war: Energy shocks continue, buffer space is running out.

The Iran war is one of the most important macroeconomic backdrops for the market recently. Oil and gas prices have fluctuated wildly as traders assess the timing and manner of the Strait of Hormuz's reopening, benefiting energy stocks while putting pressure on energy-intensive industries. The resulting rise in inflation has also weighed on government bonds.

Global economic growth can currently withstand high oil prices, but the initial shock buffers are running out. Recent focus is on negotiations between Iran and Oman regarding the management of the Strait of Hormuz.

Domestically in the United States, the average price of gasoline has risen to over $4 per gallon due to the war, compared to less than $3 in January. President Trump stated this month that defeating Iran is worth the higher oil prices, but some analysts believe he has an incentive to push prices down before the midterm elections in November.

It is worth noting that the US midterm election campaign traditionally enters its warm-up phase in September, adding uncertainty to policy directions. Gasoline prices have become a core issue for voters, while fiscal policy is similarly influenced by the political cycle.

Jefferies chief European economist Mohit Kumar directly linked the midterm elections to Treasury Secretary Scott Bessent's efforts to lower borrowing costs, noting that "the Trump administration cannot afford higher long-term interest rates before the midterm elections because mortgage rates are linked to the long term of Treasury bonds."

Analysts believe this logic implies that political pressure may influence the coordination of fiscal and monetary policies to some extent, and indirectly affect the bond market.

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