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We gather data and information from specialized sources and financial databases including but not limited to Bloomberg Finance L.P., Bureau of Economic Analysis, Bureau of Labor Statistics, Chicago Board of Exchange (CBOE) Volatility Index (VIX), Dow Jones / Dow Jones Newsplus, FactSet, Federal Reserve and corresponding 12 district banks / Federal Open Market Committee (FOMC), ICE BofA (Bank of America) MOVE Index, Morningstar / Morningstar.com, Standard & Poor’s and Wall Street Journal / WSJ.com.
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The Key Wealth Institute is comprised of financial professionals representing KeyBank National Association (KeyBank) and certain affiliates, such as Key Investment Services LLC (KIS) and KeyCorp Insurance Agency USA Inc. (KIA).
Any opinions, projections, or recommendations contained herein are subject to change without notice, are those of the individual author(s), and may not necessarily represent the views of KeyBank or any of its subsidiaries or affiliates.
This material presented is for informational purposes only and is not intended to be an offer, recommendation, or solicitation to purchase or sell any security or product or to employ a specific investment or tax planning strategy.
KeyBank, nor its subsidiaries or affiliates, represent, warrant or guarantee that this material is accurate, complete or suitable for any purpose or any investor and it should not be used as a basis for investment or tax planning decisions. It is not to be relied upon or used in substitution for the exercise of independent judgment. It should not be construed as individual tax, legal or financial advice.
The summaries, prices, quotes and/or statistics contained herein have been obtained from sources believed to be reliable but are not necessarily complete and cannot be guaranteed. They are provided for informational purposes only and are not intended to replace any confirmations or statements. Past performance does not guarantee future results.
Brokerage and certain investment advisory services are offered through Key Investment Services LLC (KIS), member FINRA/SIPC and SEC-registered investment advisor. Insurance products are offered through KeyCorp Insurance Agency USA, Inc. (KIA) and underwritten by third party insurance carriers not affiliated with KIS. KIS and KIA are affiliates under the common control of KeyCorp. To learn more about KIS’s investment business, as well as our relationship with you, please review our KIS Disclosure page. Check the background of KIS on FINRA's BrokerCheck.
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Brian Pietrangelo [00:00:00]
Welcome to the Key Wealth Matters weekly podcast, where we casually ramble on about important topics, including the markets, the economy, human ingenuity, and almost anything under the sun, giving you the keys to open doors in the world of investing. Today is Friday, September 11th, 2026. I'm Brian Pietrangelo, and welcome to the podcast. We open today's podcast with a couple lighter topics as we will move towards a more difficult conversation with today's difficult day. But first up, if you're a tennis fan, you're enjoying the US Open and the tournament in New York. So tune in for that if you want to see some exciting tennis. Also, just yesterday was National 401k Day, which again is a tremendous opportunity to utilize a 401k account for tax-deferred savings to build up for retirement. So if you're taking advantage of that, great. If you're not, Please remember 401k day as sponsored by the Plan Sponsor Council of America for retirement savings for American workers. Also this week, there's an announcement that it is a reminder of National Suicide Prevention Awareness Day and month from the perspective of understanding that you might want to reach out just to see how some folks are doing and encourage them in the case that they need to use that hotline to definitely take advantage of it. And now of course, as we move towards 9-11, the 25th anniversary of the attacks on the World Trade Center in New York and multiple places throughout the United States, we record this podcast every Friday morning, so it's particularly challenging this morning as we take time to observe the anniversary in the event. There have already been many moments of silence beginning at 8.46 A.m. throughout the TV and the world in terms of observations that I've been watching on today's TV. So we will do the same here. Again, a moment of silence to always remember and never forget the event honoring those that sacrificed their lives, the heroes, the victims, the pain, the recovery. It is quite hard to believe it's 1/4 century that we remember the events back in 2001. And from that perspective, I know some individuals that are 25 years old this month. And it's very striking to me to talk about this from the perspective of how old you were at the time that the events occurred. And it's a responsibility that we all have to remind each other to unity, respect and love, and then teach those to always remember. So with that, we will observe a moment of silence in this particular case. So thank you for joining me in that moment of silence as we experience a very difficult day every year. And so with that, we will return to our regularly scheduled programming. where I'd like to introduce our panel of investing experts, hit or share their insights on this week's market activity and more. George Mateyo, Chief Investment Officer, Steve Hoedt, Head of Equities, and Rajeev Sharma, Head of Fixed Income. As a reminder, a lot of great content is available on key.com slash wealth insights, including updates from our Wealth Institute on many different subjects and especially our Key Questions article series addressing a relevant topic for investors. In addition, if you have any questions or need more information, please reach out to your financial advisor. Taking a look at this week's market and economic activity, we've got three key economic release updates for you, plus a few updates on what's going on in the world and the markets as well. But first up, we've got the weekly initial unemployment claims report for the week ending September 5th, came in again almost exact as it was the week prior at just over 200,000 claims. And yet again, like a broken record in a good way, this number has remained extraordinarily consistent and low as a favorable indicator of the health of one of the data points for the overall employment market. And second, we have the existing home sales report from the National Association of Realtors and it shows a 2% decline in existing home sales for the month of August. which is not a surprise as it continues to be a fairly difficult market for turnover given where interest rates are and may or may not get getting worse with the yields backing up, 30-year mortgages hitting some close to all-time highs and again a potential Fed increase on the horizon. And third, we have the producer price index measure of inflation or wholesale prices, which continue to be elevated at up 0.4% in August or on an annualized basis around 4.7%, which continues to not be good and not moving in the right direction. And finally, 4th, the biggest news item for the week just occurred this morning with the release from the Bureau of Labor Statistics on the CPI or Consumer Price Index measure of inflation. Now overall CPI for the month of August was up 0.4% for all items and that is different from the core items which exclude food and energy which was up a little bit less at 0.3%. The difference there being certainly that gasoline prices rose significantly in the month of August relative to oil so ultimately that is a big driver. most economists and possibly the Fed were looking for a number that was less than or equal to 0.2% for the month, so not getting that really drives the equation a little bit differently towards a Fed rate hike here next week. The only notable positive read is that the all items index, when you exclude food and energy for a year-over-year basis, rose 2.4%, which is 1/10 down from 2.5% last month in July. That being said, we'll have a good dialogue with our participants on the panel today to get their read on what it might mean for the Fed and the economy. This week we also got news that the Iran conflict continues to be heightened with some activity over there that is certainly not favorable and then oil prices are up about $100 a barrel and that's again not favorable as well. We also had the market had a little bit of indigestion in the first couple days of the week. But this morning, as we record the podcast, the numbers are positive and green on the screen. So we'll see how that continues throughout the day. So let's get right to George for our first conversation with our panel to get his reaction on what the CPI numbers might mean for the Fed and the economy and anything else on your mind, George?
George Mateyo [00:06:43]
No, of course, I think, Brian, the biggest thing that deserves mention is what's happened in the inflation reports this past week. And just to kind of cut to the chase, the reports were a little bit hotter, as they say, than expected. Or in other words, maybe inflation prints are a little bit stronger than expected. And it was kind of broad based. There are some components we can kind of parse our way through to kind of maybe think that inflation is easy to some extent. But all is equal, I think it's fair to say that inflation, as we've kind of suggested in the past, probably is a bit stickier. And that's probably the big headline that we all have to kind of grapple with. And the markets are certainly repricing expectations for rate hikes and so forth. Overall, I think it kind of suggests that maybe there's this ongoing narrative around concerns around what's happening in the Middle East and prices at the pump. That's one factor for sure. The continued build out of the AI infrastructure is also pushing up inflation. And that's something we've also been signaling for quite some time. That remains in force. And I think it's fair to say that all else equal again, it's the same, it's likely that I think the economy is still in pretty good shape. So one reason I think that rates are rising that presents a bit of a silver lining has to do with the fact that the overall economy is in still pretty good shape. Now, it does kind of create the situation too that interest payments on various obligations such as mortgages, credit cards, and of course our own federal deficit and debt are also going up too, which is maybe somewhat worse. And so to some extent, this kind of notion where the economy is doing well enough that's kind of propping up rates and pushing prices up also has a downside effect. At some extent, maybe we see inflation actually coming down if in fact rates go up higher and also that causes spending and other things to fall back a little bit further. So I think it's a two steps forward, one steps back phenomenon. I think it's also important to recognize that what happens next with the economy is going to be largely up to policymakers and the response to that. And of course, next week, we'll start to hear from the Federal Reserve more specifically. They've been talking pretty vocally, Rajeev, about inflation being too hot for comfort. Now it seems like future markets are pricing in expectations of a rate hike. But what are your thoughts as we head into next week and what the Fed might do with the stronger than expected inflation readings that we've got this week?
Rajeev Sharma [00:09:04]
Well, once again, George, how quickly expectations can change based on data that we receive from the market. And that's really what Kevin Warsh has been saying, that you have to keep an eye on the data. And we do anticipate data being very important. So we get the CPI print delivers a hotter than expected reading and the knee jerk reaction that we saw where yields moved higher. But then very quickly the curve reversed action and we got into this bull flattening pattern where we're seeing longer end yields rallied. They started to move lower, sharply, faster at a faster clip than the front end of the yield curve. And why is this happening? Why did we have that reversal? While the hot core inflation print does push market expectations for a rate hike next week, but it's also put somewhat of a cap on how high long end yields can run, especially the long end, which is rallying with the view that near-term tightening would ultimately suppress inflation and cap terminal rates. The 10-year Treasury note yield also pulled back from that psychological level of 5%, which had been approached a few times right before the CPI print came out. So if we look at interest rate swaps, try to get a sense of what the Fed is going to do next week. The market right now does think that the Fed will raise rates at the September FOMC meeting. Those swaps now price close to a 90% probability that the Fed will hike interest rates by 25 basis points at the next meeting. And in fact, if you extrapolate that out, the interest rate swaps are now two full, are pricing in two full rate hikes by the year end. It's very interesting to see how things changed. Obviously, we've talked a lot about how these expectations have changed, and one data point does not make a trend. So the Fed does really have to think about how long the war is going to go on, the impact of oil prices, impact on inflation. Is it worth hiking rates right now, or do we continue to wait and see approach? Either way you want to look at it, we're looking at rates being higher for longer, at least in the near term. So you can expect that to continue. Now, one thing we did see is the ECB raised its deposit rate by 25 basis points to 2.5%. Now that is the second rate hike since the Iran War broke out in February. And after that, we saw global energy prices rising. ECB wanted to be preemptive. The move was pretty much anticipated that given the inflation backdrop. So it wasn't a surprise to the markets, but the ECB did say that they are not committed to any further tightening and will decide meeting by meeting. So if you decipher that, meeting by meeting means essentially data point by data point. If we look at swaps markets for Europe, October is totally in play for another hike and swaps are fully pricing in three more quarter point hikes by mid 2027 for Europe and greater than 50% chance that there could be a fourth rate hike. So we do get on this rate hike cycle. So you have basically on one side, you have a hawkish ECB. You combine that with this harder than expected US core CPI data, and you reinforce this theme that there's a broader global tightening narrative out there that gives the Fed some political cover and frankly analytical cover too to raise rates next week if they wanted to. So I think this is going to be very interesting. We did see dissensions last time we had a Fed meeting. We did see three. 3 dissenters that were calling for 25 base point rate hikes. So it's not against the realm of possibility that you get some more dissenters at this meeting and actually push for a rate hike. So this is going to be a very interesting one, George. Now, if you look at credit spreads, just to switch gears a little bit, we are seeing the impact on credit spreads, modest impacts. High yield spreads did drift modestly wider this week by 5 basis points. Given the oil backdrop, given oil going over $100 a barrel, you have the rising UST yields, US Treasury yields. Investment grade spreads also saw some modest widening, but also was a function of the fact that we had a lot of new issuance for the investment grade calendar this week. We had $68 billion in new investment grade paper come to the market. It was the 4th busiest week of 2026. And I would say demand remains constructive and these deals were very well oversubscribed. So liquidity in the credit markets continue, which is a good thing. Deals are getting done, which is a very good thing. I do think that if rates continue to move higher that we've seen in the last couple of trading sessions, you will start to see issuers come to market more frequently right now than to wait for a rate hike by the Fed and have to borrow a higher borrowing cost.
George Mateyo [00:13:36]
Well, speaking of higher borrowing costs, Rajeev, I think it's interesting. I don't know if you've got a thought on this, but of course the president was out this week talking about some type of dividend check to every American if certain things happen in the election and not make this too much of a political commentary, but if everybody gets a $5,000 check, and I don't know what the provisions of that, there might be some exemptions or some carve outs, but wouldn't that actually push inflation even higher?
Rajeev Sharma [00:14:02]
It would. And I think what would happen here is you have to think about the debt situation in the United States. Where is this roughly $1.3 trillion going to come from? I don't think that's going to help the situation as far as our fiscal deficit goes. And I do think that it's going to be a problem. So there's not a lot of details about this. The question really is, when you're running a fiscal deficit the way we are, it's going to be very difficult to have the support to do something like this. So not to get political or anything, but I think that it's going to be something that's going to be on the mind of how do we move forward to bring the deficit down if we keep adding to it.
George Mateyo [00:14:39]
So I think the other thing that we should probably talk about too, Steve, I'll get your thoughts on this, has to do with data centers. And another thing that the administration has been talking a lot about has to do with continued emphasis and really support for growth of data centers. And I would've thought this would've been a big election issue in 2028, but it seems like it's actually becoming an issue in 2026. Are you thinking, Steve, are you having thoughts about data centers and what that's also doing not only the stock market in certain sectors of the stock market, but the economy itself?
Steve Hoedt [00:15:12]
So the politics on this are fascinating because I think no matter what the outcome is of the election, you're still going to get data centers built because there's been enough grease put into the wheels of the machine that it doesn't matter who wins. So people can complain about it up one side and down the other. But this is going to be probably yet another example of the ballot box not really mattering in terms of an actual impact. When you look at what's going on, the reason behind that is very simple, because if you look at what's been driving US economic growth numbers for the last 18 to 24 months, it's been all of this data center and AI infrastructure stuff. It's pretty important to the economy. And it's really hard to see how this is gonna be reversed absent some type of apocalyptic kind of thing. And we can or we can go down the apocalyptic path if you want to, George.
George Mateyo [00:16:22]
Well, people I think who've tried to do that in the past have been very disappointing in the sense if we think about the time of, if we look at the epic of history, And of course, there's been other times in the past where people have been very concerned about certain events turned out very, very badly, very negatively. And those have not actually come true. So as we've said many times, I think it's important to really embrace optimism and really belong ingenuity. And I think that's been the winning trade.
Steve Hoedt [00:16:51]
Yeah, when you look at it, Obviously, the bad outcome that people think about with AI is the Terminator outcome, right? For lack of a better word. And I think if you look at typical technology adoption cycles, we don't go down that path. And will this time be different? I don't know. It's hard to make that case. You've got to think that there will be developments that will occur that won't allow us to to have that really bad outcome, right?
Brian Pietrangelo [00:17:30]
Steve, let's talk about something a little adjacent to that maybe, which is housing. We haven't talked about housing in a while and it continues to be stalled on a decline on existing sales month over month. But what are your thoughts about housing as it relates to data center locations? Where do you see that going?
Steve Hoedt [00:17:48]
I mean, that's a good question. Housing in general has been under pressure because of what's been going on in the rates market. And the discussion that Rajeev and George were having earlier there, I mean, this really does look to me to be a global phenomenon. And if you look at 10-year yields across the board, whether it's the US, Germany, Japan, the UK, pick your country, 10-year yields are moving up into the right. That tells me something's going on. And it's not necessarily just the deficit spending situation in the United States that's causing it. And that something is likely inflation. And given that, the housing market has been under significant pressure because mortgage rates have been higher than people would like them to be for quite a while. And it does not look like that's going to change anytime soon. When you look at the data center locations, it's puts and takes, right? So if you live in an area where data centers are going in, that is going to be stimulative to the economy because you're going to have more workers and theoretically higher paying jobs even after the construction process is done. There's jobs associated with that. So you would think that would be a positive. But on the flip side, If you live too close to it, you've got noise pollution and other stuff, maybe water issues, things like this that potentially negatively impact quality of life. So I don't know how far the distance is from that, that it has a potentially negative impact. Again, I mean, I've said on these calls before, I live within 6 miles of one of the largest projects in the United States. I can tell you we've had quality of life impacts from the traffic that's been hauling stuff in and out of that construction site. Who knows what it's going to be like once it goes online. And there's a lot of talk about the impact on the water stuff around us. So I think some of this stuff is to be determined yet. And I think that people are aware of where these are. And it's going to be something that is potentially going to start to factor into things like that. But is it going to be a major driver of overall US housing prices? Probably not. I think that's going to be really tied to the global rates outlook and inflation.
Brian Pietrangelo [00:20:19]
Well, thank you for the conversation today, George, Steve, and Rajeev. We appreciate your insights. Before we close the podcast, we've got a program note. We talked about it last week. We'll talk about it again for the next couple of weeks. And that is, we've got a national client call coming up on September 29th. We'll have George and Rajeev joined by Libby Cantrill of PIMCO to talk about the midterm elections and what it might mean for the markets and the economy. So if you need an invite, please reach out to your relationship manager. Again, Tuesday, September 29th at 3 P.m. Eastern. So thanks to our listeners for joining us today and be sure to subscribe to the Key Wealth Matters podcast through your favorite podcast app. As always, past performance is no guarantee of future results, and we know your financial situation is personal to you. So reach out to your relationship manager, portfolio strategist, or financial advisor for more information, and we'll catch up either next week to see how the world and the markets have changed and provide those keys to help you navigate your financial journey.
Disclosure [00:21:24]
We gather data and information from specialized sources and financial databases including but not limited to Bloomberg Finance L.P., Bureau of Economic Analysis, Bureau of Labor Statistics, Chicago Board of Exchange (CBOE) Volatility Index (VIX), Dow Jones / Dow Jones Newsplus, FactSet, Federal Reserve and corresponding 12 district banks / Federal Open Market Committee (FOMC), ICE BofA (Bank of America) MOVE Index, Morningstar / Morningstar.com, Standard & Poor’s and Wall Street Journal / WSJ.com.
Key Wealth, Key Private Client, Key Private Bank, Key Family Wealth, and KeyBank Institutional Advisors are brand names used by KeyBank National Association (KeyBank). Key Wealth and Key Private Client are also brand names used by Key Investment Services LLC (KIS), member FINRA/SIPC and SEC-registered investment advisor.
The Key Wealth Institute is comprised of financial professionals representing KeyBank National Association (KeyBank) and certain affiliates, such as Key Investment Services LLC (KIS) and KeyCorp Insurance Agency USA Inc. (KIA).
Any opinions, projections, or recommendations contained herein are subject to change without notice, are those of the individual author(s), and may not necessarily represent the views of KeyBank or any of its subsidiaries or affiliates.
This material presented is for informational purposes only and is not intended to be an offer, recommendation, or solicitation to purchase or sell any security or product or to employ a specific investment or tax planning strategy.
KeyBank, nor its subsidiaries or affiliates, represent, warrant or guarantee that this material is accurate, complete or suitable for any purpose or any investor and it should not be used as a basis for investment or tax planning decisions. It is not to be relied upon or used in substitution for the exercise of independent judgment. It should not be construed as individual tax, legal or financial advice.
The summaries, prices, quotes and/or statistics contained herein have been obtained from sources believed to be reliable but are not necessarily complete and cannot be guaranteed. They are provided for informational purposes only and are not intended to replace any confirmations or statements. Past performance does not guarantee future results.
Brokerage and certain investment advisory services are offered through Key Investment Services LLC (KIS), member FINRA/SIPC and SEC-registered investment advisor. Insurance products are offered through KeyCorp Insurance Agency USA, Inc. (KIA) and underwritten by third party insurance carriers not affiliated with KIS. KIS and KIA are affiliates under the common control of KeyCorp. To learn more about KIS’s investment business, as well as our relationship with you, please review our KIS Disclosure page. Check the background of KIS on FINRA's BrokerCheck.
Non-Deposit products are:
NOT FDIC INSURED • NOT BANK GUARANTEED • MAY LOSE VALUE • NOT A DEPOSIT • NOT INSURED BY ANY FEDERAL OR STATE GOVERNMENT AGENCY