What Could Shake Up Markets in September?

September historically introduces heightened market volatility as investors return from summer and capital market activity accelerates. This seasonal trend is particularly relevant now following an unusually calm summer characterized by low realized volatility in U.S. stocks and credit. Three primary catalysts drive this outlook: significant uncertainty surrounding the Federal Reserve's September 16th interest rate decision, a surge in capital market activity fueled by a growing IPO pipeline and AI-related construction funding, and persistent instability in global energy markets. With European diesel prices up 140% since January and oil projected to reach $100 a barrel, energy supply remains a critical risk factor. While current expected volatility in interest rate and foreign exchange markets remains low, these converging factors suggest a shift toward more turbulent conditions. By month-end, clarity regarding the Fed's trajectory and energy flows should emerge, potentially stabilizing the long-term outlook.