Market Chartbooks, September 2026 - Equities absorb the rates shock, while commodities broaden beyond oil

The latest market chartbooks and their accompanying data sheets for September 2026 can be found below. I have rejigged the sequence of these to run monthly, as the chart/data don’t change enough to merit a weekly run.

US equity sectors (PDF) - Here

US equity sectors (Excel, view only) - Here

Global equities (PDF) - Here. (apologies for the truncated rotational chart. This is due to huge outlier data in Korea (EWY) and Taiwan (EWT); will attempt to fix for the next run).

Global Equities (Excel, view only) - Here

Commodities - Here

I have left the AI-generated round-up of the data intact below, but would emphasise the following points, which are also pin-pointed below, but which deserve a broader focus. Opportunities in the relative rotational models/charts above lie in the lower right quardrant in which trailing relative performance is still negative, but with improving relative momentum. From that perspective, the charts offer remarkable opportunity—albeit not yet confirmed—for rotation strategies, despite soaring interest rates.

In US sector space: Materials, Industrials, Real Estate (XLRE), Financials and Staples are now positioned in the lower right quadrant of the relative rotation chart.

In global equity space: Too many to mention, but really noteworthy here I think that Indonesia and India are creeping into the lower right quadrant.

In commodities: Softs are now poised to shift into outperformance, which I think is a credible second leg of the global inflation shock next year, even as energy invariably cools.

AI round-up below

Equities absorb the rates shock, while commodities broaden beyond oil

September delivered a unusually severe test of the market’s internal structure. The ten-year US Treasury yield rose by 53 basis points, its largest monthly increase since September 2022; the Federal Reserve tightened for the first time since 2023; Brent gained almost 14%; and both the S&P 500 and European equities fell. Yet global equity indices ended the quarter only around 2% below record highs and remained more than 12% higher year-to-date.

The chartbooks largely confirm this resilience, but with an important qualification. The equity regime has not broken; rather, leadership has rotated towards assets capable of tolerating higher nominal growth, higher inflation and scarcer energy. Technology remains a structural leader, but energy, healthcare, materials and selected non-US markets are increasingly important. The weakest signals are concentrated in the rate-sensitive domestic sectors and in countries exposed to deteriorating terms of trade.

Commodities tell a more emphatically reflationary story than equities. Energy is dominant, but the latest signal is no longer simply “oil up.” Industrial metals have strengthened relative to precious metals, copper has recovered sharply against gold, and parts of agriculture are gaining momentum. The tension is that this breadth looks superficially like stronger global demand, while the underlying energy relationships still point primarily to supply disruption and acute product-market scarcity.

Equities: the barbell survives, but its centre of gravity is changing

The US sector map preserves the broad structure evident earlier in September. Energy and technology remain the only sectors with both strongly positive twelve-month relative returns and positive or near-neutral recent momentum. Energy is approximately 24 percentage points ahead of the S&P 500 over twelve months, while technology is ahead by around 23 points. Healthcare has now moved more decisively into the improving quadrant: its relative return is roughly 11 points and its ninety-day change is the strongest in the universe.

That matters because healthcare provides a third route through the current regime. Technology represents structural earnings growth; energy captures the supply shock; healthcare offers defensive growth without the same duration sensitivity as technology. Its appearance alongside energy and technology in the top-five momentum portfolio therefore looks more significant than a routine sector rotation.

Materials have replaced industrials in that portfolio. The current risk-parity basket consists of energy, technology, healthcare, world ex-US equities and materials. Materials still trail the S&P 500 modestly over twelve months, but their relative momentum has improved. Industrials remain fundamentally strong—their one-year return is just above 20%—but their recent relative impulse has softened. The change from industrials to materials is a subtle but credible move from a capital-expenditure theme towards a more direct inflation and commodity-beta exposure.

The basket is not especially defensive. Its expected return is 15.3%, volatility 9.1% and Sharpe ratio 1.68. Earlier in September, the corresponding momentum portfolio had an expected return of roughly 17.7%, volatility of 8.2% and a Sharpe ratio above two. The selected themes remain persuasive, but their efficiency has deteriorated as volatility has risen and leadership has become less smooth.

Beneath those leaders, the rate shock is clearly visible. Consumer discretionary and homebuilders are around 27–28 percentage points behind the S&P 500 over twelve months. Utilities have also deteriorated, while real estate remains a laggard despite modestly improving momentum. Financials have positive absolute returns but significant relative underperformance. In other words, higher yields are not producing the textbook pro-cyclical rotation into banks, housing and consumer beta. They are instead separating nominal-growth beneficiaries from sectors dependent on affordable financing.

This distinction also appears in the correlation signals. Financials have an exceptionally low cross-correlation z-score, indicating that they are trading increasingly idiosyncratically rather than as part of the prevailing equity factor. Homebuilders, healthcare, staples and world ex-US equities also have below-normal correlations. Technology and energy, by contrast, remain relatively aligned with the dominant market regime. Falling cross-correlations can create diversification, but here they also reveal fragmentation: the index remains stable because different sectors are responding to very different macro forces.

The optimisation results reinforce that tension. The minimum-variance portfolio produces a 14.8% expected return at just 5.0% volatility, with maximum allocations to staples, consumer discretionary and world ex-US equities, plus a substantial healthcare weight. The tangency portfolio raises expected return to 19.4% and allocates the 20% cap to technology, discretionary and world ex-US equities, with 18.4% in financials. These portfolios are shaped by three years of returns and covariance, not just the latest signal. Their continued preference for discretionary and financials therefore should not be mistaken for confirmation that those sectors have regained leadership. It is better interpreted as a contrarian allocation signal: their covariance and medium-term return characteristics remain attractive even while price momentum is poor.

Global equities extend the same argument. Korea is still the extraordinary twelve-month winner, outperforming the ex-US benchmark by more than 100 percentage points, but its relative momentum has reversed sharply. Reuters notes that the KOSPI pulled back almost 20% during the quarter despite remaining roughly twice its year-earlier level (Reuters). Taiwan, by contrast, retains both strong twelve-month outperformance and positive momentum. The AI and semiconductor trade is therefore weakening at its most extended edge rather than collapsing across Asia.

The global top-five momentum basket now comprises Korea, Taiwan, Peru, Norway and Spain. This is a meaningful broadening from a narrowly Asian technology story. Peru supplies metals exposure, Norway energy beta and Spain a European cyclical component. Its expected return is an exceptional 31.7%, but volatility is 20.3%, leaving a Sharpe ratio of 1.56. Risk-parity weights favour Norway at 32.7% and Spain at 26.9%, followed by Taiwan, Peru and Korea. The smallest weight goes to the asset with the most spectacular trailing return, which is precisely what a volatility-aware allocation should do when leadership is decelerating.

The global tangency portfolio is more balanced and arguably more informative: Canada, Japan, China, Taiwan, India, Turkey, the UK, Germany, Italy and Spain all receive weights. Its expected return is 19.9%, volatility 5.6% and Sharpe ratio 3.53. This suggests that the broader opportunity set remains healthy even though the pure momentum trade has become riskier.

India is an interesting divergence. Its twelve-month relative performance remains weak, reflecting its exposure to imported energy and tighter global financial conditions, but ninety-day relative momentum has improved sharply. Indonesia displays a similar, more extreme pattern from a weaker starting point. These are credible contrarian candidates if oil stabilises. They are not yet clean longs under an ongoing energy shock.

The conclusion from equities is therefore one of resilience rather than immunity. Earnings and AI capital expenditure have so far offset the discount-rate shock, while energy and healthcare provide alternative leadership. But the failure of housing, discretionary and financials to validate the “strong growth” interpretation warns against reading high yields as benign reflation. European shares fell 2.5% in September as oil and bond yields rose, despite energy being the region’s strongest sector (Reuters). The equity regime can continue, but it is becoming more selective and less tolerant of financing dependence.

Commodities: an energy shock with a widening reflationary halo

Energy remains the dominant commodity sector. It returned approximately 42% over twelve months, contributed more than 12 percentage points to the benchmark return and has positive performance breadth across roughly 80% of its constituents. Industrial metals returned around 34%, with every constituent positive. Together, these sectors account for the overwhelming majority of benchmark gains.

The internal energy signals are more revealing than the headline. Heating oil has outperformed WTI by roughly 55–60 percentage points over twelve months, while gasoline has outperformed by around 30 points. Brent’s advantage over WTI is much smaller. This is a refined-products shock as much as a crude shock. US diesel inventories reached their lowest seasonal level in records dating to 1982, while the diesel crack spread hit a record $118.62 per barrel in mid-September. (Reuters)

That explains why equities have not interpreted higher oil prices as straightforward evidence of vigorous demand. Refining constraints, disrupted Russian and Gulf supply, depleted distillate inventories and shipping risk impose a tax on transport, manufacturing and agriculture. Analysts raised their 2026 Brent forecast to $89.05 in September, but cited impaired Gulf exports and inventory depletion rather than accelerating consumption. (Reuters)

The more constructive signal comes from metals. Copper has swung from deep underperformance against gold to roughly 30 percentage points of outperformance. The broader industrial-metals basket is also about 30 points ahead of precious metals. This is a material change from the defensive configuration seen earlier in the year. It is consistent with the resilience of AI-related investment, grid spending and physical infrastructure, and with the inclusion of materials and Peru in the equity momentum portfolios.

Precious metals themselves remain positive, but momentum has faded. Gold still has a positive twelve-month return, yet it now trails silver and the broader industrially sensitive precious complex. Gold’s relative advantage over silver has fallen sharply, while platinum continues to outperform palladium. This does not negate the monetary or fiscal case for gold; it shows that the marginal commodity impulse has moved towards higher-beta metals. For trend followers, copper and the diversified industrial-metals complex now offer cleaner signals than adding to gold after a mature defensive run.

Agriculture is improving from a weaker base. Grains and oilseeds returned around 14%, with 80% positive breadth and 60% improving momentum breadth. Soft commodities have only modest positive twelve-month returns, but all their constituents are improving over ninety days. Corn and soybeans are strengthening relative to the commodity benchmark, while wheat continues to lag corn. Soybean meal is outperforming beans, and soybean oil remains ahead of raw beans despite losing some momentum. The implication is rotation rather than a uniform food-price shock.

Livestock is the clear outlier: negative twelve-month returns, zero positive breadth and no improving constituents. Precious metals also have no improving breadth despite positive longer-term returns. That creates a clean trend-following hierarchy: energy first, industrial metals second, selective grains and softs next, with livestock and mature precious-metal positions at the bottom.

The principal contrarian opportunities lie where improving momentum conflicts with poor trailing performance. Softs fit that description, although their signals remain highly idiosyncratic. Cocoa still underperforms coffee and sugar heavily after its earlier boom-and-bust cycle. Within equities, India and Indonesia offer an analogous setup, but both require an easing in the energy constraint.

The broader message is that September did not invalidate the earlier barbell thesis. It made it more explicit. Markets are rewarding structural growth on one side and scarce physical resources on the other. What changed during the month is that the commodity side broadened from crude oil into refined products, industrial metals and parts of agriculture, while the equity side became more fragmented.

That configuration remains investable, but it is increasingly unstable. If yields rise because real growth and productivity are improving, technology, industrial metals and selected cyclicals can coexist. If they rise because energy scarcity is lifting inflation while fiscal and bond supply concerns increase term premia, the weakness in housing, discretionary stocks and broad European equities is likely to spread. September’s chartbooks cannot settle that macro question, but they show precisely where the market is drawing the distinction.

Disclaimer

This material above is provided for informational and research purposes only and does not constitute investment advice, an investment recommendation, or an offer or solicitation to buy or sell any financial instrument. The analysis reflects the data, methodologies and assumptions described in the relevant chartbooks and should not be relied upon as the sole basis for any investment decision. Past performance, historical relationships and model-based signals are not reliable indicators of future results.

Certain summaries and commentary accompanying these materials have been generated or assisted by artificial intelligence. AI-generated content is based on the underlying research materials provided to the system and may contain errors, omissions or misinterpretations. Such content should therefore be treated as analytical support rather than independently verified research and should be considered alongside the underlying data and charts.

Readers should conduct their own analysis and, where appropriate, seek independent professional advice before making investment decisions. The author may hold positions in the securities mentioned above, and more generally, may be invested in the broader themes through other means.