Beyond the UN Meetings

There has been a lot happening in the markets this week, with investors balancing the latest developments in the Middle East, the UN meetings in New York, interest rates, and the ongoing strength of the economy.

Yet despite all of that, markets have continued to move higher. The Nasdaq reached a record high earlier this week, while the S&P 500 remains close to its own record. At the same time, longer-term Treasury yields have remained elevated, reflecting the market's continued focus on inflation, government borrowing and where interest rates ultimately settle.

That is an interesting backdrop given the amount of uncertainty in the world.

The meetings at the UN this week have put geopolitics back in focus, particularly the conflict in the Middle East and the ongoing war in Ukraine. But there have also been some more constructive developments.

There is also an important development in the US-China relationship. President Trump and President Xi Jinping are meeting as the two countries look to manage their broader economic relationship, with trade and tariffs likely to be important areas of discussion. They have also agreed to extend their existing trade truce into January.

That does not mean the underlying differences have been resolved. Trade, technology, Taiwan and other issues remain on the agenda. But the extension of the truce is constructive. A return to escalating tariffs between the world's two largest economies would create another headwind for businesses and investors, while greater stability gives companies more certainty around trade and investment.

We have seen a similar dynamic with oil this week. Prices initially fell as investors saw some possibility of progress in Middle East negotiations, before rising again as those hopes faded. Brent crude moved back above $100 a barrel on Wednesday.

That matters because higher energy prices can put upward pressure on inflation and, in turn, interest rates. The Federal Reserve has already raised its benchmark rate to 3.75% to 4.00%, and persistent inflation remains an important consideration for policymakers.

Markets have demonstrated an ability to look through uncertainty when the underlying economy and corporate earnings remain supportive. That has been one of the more encouraging developments this year.

As we look toward the balance of 2026, there will undoubtedly be more developments to digest. The important question is whether they change the underlying economic picture.

The UN meetings may not tell us where markets will finish the year. But they are reminding us what markets will have to navigate to get there.

For now, the resilience we are seeing in markets is worth paying attention to.

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