September marked a turning point in U.S. monetary policy. The Federal Reserve raised its benchmark rate for the first time since 2023 (by 25 basis points, to a range of 3.75% to 4.00%) in a unanimous decision, triggering a broad sell-off in the bond market and pushing the 10-year Treasury yield to levels not seen since 2007. The effect on equities was unusual volatility, with a difference of more than six percentage points between the best- and worst-performing major U.S. indices in a single month.

The performance by index illustrates this dispersion; the Dow Jones fell 4.29% and saw its year-to-date gain shrink to 5.91%, breaking a five-month winning streak; the S&P 500 closed virtually flat with a 0.45% decline and remains up 11.77% for the year; while the Nasdaq rose 1.86% and extended its year-to-date gain to 15.57%. The explanation lies in the composition of each index: the rise in interest rates weighed on the cyclically sensitive industrial and financial companies that dominate the Dow, while the Nasdaq found support in semiconductors and companies linked to artificial intelligence, whose investment cycle remains strong. Globally, the ACWI fell 1.26% and is up 11.84% year-to-date.

The source of the pressure currently affecting the markets lies in the energy sector. Oil prices rebounded again, with WTI rising 5.43% to close at $90.42 per barrel and posting a year-to-date gain of 57.47%, while Brent surpassed $100 amid the lack of safe passage through the Strait of Hormuz. Gold, by contrast, fell 6.55%—an atypical response to geopolitical risk that can be explained by the rise in real interest rates and the strength of the dollar. Bitcoin rose 6.05%, and copper closed virtually unchanged, maintaining a 16.53% gain for the year.

That inflationary pressure was the central rationale behind the Fed’s September 16 decision. The Committee voted unanimously in favor of the rate hike, citing the resilience of the U.S. economy and oil prices. Warsh described the move as the withdrawal of an accommodative measure rather than a tightening, but the projections were unequivocal: 16 of the 18 participants anticipate at least one additional rate hike before the end of the year. The reaction in the bond market was severe, with all segments closing the month with losses exceeding 2.5% and the 30-year Treasury yield reaching 5.63%—its highest level since 2002—also pressured by fiscal deterioration and an abundant supply of corporate debt.

The most visible effect of this movement on the local market was on the exchange rate. The Mexican peso depreciated by 6.32 percent—its sharpest decline since June 2024—making it the hardest-hit currency among the major exchange rates. The currency went from 16.86 pesos per dollar on September 4—its strongest level of the year—to closing at around 18.07, erasing virtually all of its year-to-date appreciation. The trigger was the narrowing of the interest rate differential with the United States: while the Fed raised its rate, BANXICO kept its rate at 6.50% at its September 24 meeting and indicated that it would not react mechanically to its counterpart’s decisions. The CPI fell 1.86% for the month, erasing its annual gain.

In summary, September brought a shift in market expectations: the discussion shifted from when rate cuts would come to how many additional rate hikes would be necessary. In this context, Grupo Inversión’s Investment Committee made two adjustments to the portfolios during the month. In fixed income, it reduced the only position with a duration of more than three years, thereby limiting the portfolios’ sensitivity to a shift in rates that was concentrated precisely at the long end of the curve. In equities, it increased exposure to emerging markets by 50%, a decision supported by attractive valuations and particularly solid earnings growth projections for the region, taking advantage of the recent correction in these markets resulting from the strengthening of the dollar.

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