What Could Shake Up Markets in September?

September historically triggers increased market volatility as investors return from summer and capital market activity restarts. Despite a calm summer with low realized volatility in U.S. stocks and yields, several catalysts suggest a shift toward higher market movement. Central bank policy remains a primary driver, with a high probability of a Federal Reserve rate hike on September 16th alongside critical meetings from the Bank of Japan and the European Central Bank. Furthermore, an unusually active capital market is expected due to a growing IPO pipeline and funding requirements for AI-related construction. Global energy markets add further pressure, as restricted flows could push oil prices toward $100 a barrel by the fourth quarter, with European diesel prices already up 140% this year. While current expected volatility in interest rate and foreign exchange markets remains low, these converging factors indicate that volatility levels are poised to rise.