Securitized markets continued to experience robust issuance in September, even as rising interest rates slowed activity and signs of credit deterioration emerged in certain segments. Spreads remained relatively tight across most risk assets, with agency mortgage-backed securities and high-yield corporate debt notable exceptions.

Asset-Backed Securities (ABS)

ABS issuance totaled $27.5 billion in September, bringing year-to-date issuance to $284 billion, ahead of comparable 2025 and 2024 levels. Auto ABS accounted for approximately half of monthly issuance, while activity in data center and device payment securitizations increased. Collateral performance remained generally positive, with improving credit trends in prime auto and credit card ABS. Subprime auto delinquencies stabilized, though solar ABS continued to experience deterioration.¹

Commercial Mortgage-Backed Securities (CMBS)

CMBS credit pressures persisted, with overall delinquencies rising to 8.02% in September. Office delinquencies reached 12.09%, while multifamily and lodging also experienced increases. Special servicing rates climbed, reflecting continued challenges across commercial real estate. Despite these headwinds, non-agency CMBS issuance reached $133 billion year to date, surpassing full-year 2024 production.²

Residential Mortgage-Backed Securities (RMBS)

Non-agency RMBS issuance slowed to $15.3 billion in September from $19.4 billion in August as higher interest rates weighed on activity. Nevertheless, year-to-date issuance remained on pace to exceed prior-year levels, with non-qualified mortgages continuing to represent a significant share of new supply.¹

Consumer Credit Trends

Consumer fundamentals showed signs of weakening as slower employment growth, elevated gasoline prices and rising borrowing costs pressured household finances. However, collateral performance across most ABS sectors remained resilient, highlighting the divergence between broader economic headwinds and underlying securitized credit trends.¹

Movements in the price of gold have grown more nuanced since the outbreak of war with Iran in late February. Since then, gold has become more reactive to the variables that traditionally have influenced its price over the short term. Factors such as economic activity and inflation, the direction of real interest rates, geopolitical risk and fiscal dynamics had a push-pull effect throughout the third quarter.¹

It remains to be seen whether we have entered a prolonged hiking cycle or if this hike represented a one-off that will be followed by more “data-dependent” decisions moving forward. While we view additional rate hikes as possible, the deliberate lack of formal Federal Reserve guidance under Chairman Warsh’s regime makes policy trajectory difficult to assess.

With or without another Fed move, however, the fourth quarter figures to be an eventful one. Not least of the new variables to digest is the November election in the US that will decide the balance of Congress and potentially provide some insight into the trajectory of trade policy, domestic spending and the Iran war.

We believe that these mounting risks highlight the importance of a strategic long-term allocation to gold as a potential hedge in diversified portfolios.