Market Insights: September 2026

One of the more important developments through August was the rise in the interest rate that governments pay to borrow (bond yields). 

When governments borrow, investors are increasingly seeking a higher return to lend to them, particularly where government debt is growing. This matters to investors more broadly because these rates influence the cost of borrowing across the economy, from business finance through to home loans. 

Through August, this was evident across most developed economies, where government bond yields rose for a second consecutive month. A useful illustration of how closely government debt is now being watched is that France’s borrowing costs moved above those of Portugal, Spain and Greece, countries that were considered far riskier borrowers for much of the past decade. By late August, France’s 10-year bond yield sat at around 4.1%, above Greece at around 3.9%, Spain at around 3.7% and Portugal at around 3.6%. It reflects a market that is paying closer attention to how well individual countries are managing their finances. 

• US sharemarket (S&P 500): up around 1.6%, finishing the month near record highs. 
• Australian sharemarket (S&P/ASX 200): up around 1.1%. 
• Australian 10-year government bonds: borrowing rate rose about 12 basis points (0.12%) to 5.11%, with the Reserve Bank holding the cash rate steady at 4.35%. 
• US government bonds (10-year): up around 4 basis points to 4.75%. 
• French government bonds (10-year): the largest mover, up around 18 basis points to 4.17%, amid concerns about France’s widening budget deficit. 

A notable feature of the current environment is that different parts of the market appear to be signalling different things. 

Sharemarkets have remained reasonably resilient, supported by reasonably healthy company earnings, while bond markets have been more cautious about the outlook. When markets are not aligned, the overall picture becomes harder to interpret. This reinforces the value of looking beyond short-term movements and maintaining a diversified, long-term approach. 

Recent attention has turned to private credit, essentially lending made outside the traditional banking system, and in particular lending to Australian property developers. Higher interest rates and a slower property market have placed some of these borrowers under pressure, which has attracted considerable media coverage.  

An important distinction is that private credit in Australia is far more concentrated in property and development than in the United States, where it is spread across a much broader range of businesses. Property and development lending represents approximately 50% of private credit in Australia, compared with around 6%-10% in the United States. This helps explain why the Australian property lending story has attracted such attention locally. 

The key point for customers is that market headlines do not necessarily reflect how portfolios are positioned, whether you are building your super, drawing an income in retirement, or investing outside super. 

At CFS, the private credit exposure for our super portfolios sits outside Australian property development. As a result, our super portfolios do not carry the type of Australian property lending that has been the focus of much of the recent commentary. 

This reflects an important investment principle: not all investments within the same asset class carry the same risk. Portfolio construction, diversification and manager selection all play a meaningful role in managing that risk. 

Markets rarely move in a straight line, and different investments respond differently to the same conditions. This is why diversification remains one of the most effective ways to manage uncertainty. Rather than reacting to individual headlines, a diversified approach helps keep the focus on longer-term objectives, whether you are still building your super, drawing an income in retirement, or investing for other goals along the way. 

Our approach remains focused on balancing long-term growth opportunities with prudent risk management. Diversification across asset classes, regions and investment styles remains central, and we continue to monitor inflation, government debt, interest rates and credit markets as we position portfolios for a range of conditions. 

Markets have remained resilient, but government debt, rising bond yields and pockets of stress within private credit are all worth watching. None of these developments signals a significant shift in direction, though they do reinforce the importance of careful portfolio construction. For customers and investors alike, remaining diversified and focused on the long term is as important as ever.