14 September 2026
This week’s highlights include rate decisions from the Fed, BoE, and BoJ. With limited data the ECB President Lagarde’s speech at the Hofburg im Dialog — Economy, Europe, Resilience conference will garner market focus today. Tuesday kicks-off with key economic data from China, including retail sales, property prices, industrial production and fixed-asset investment. In the UK we have the employment report, and later the US Empire State manufacturing print. The ECB’s Cipollone and Schnabel are scheduled to speak. Eurozone industrial production, UK CPI and US retail sales are due on Wednesday. It will likely be a close call at the FOMC meeting, where markets are currently pricing a ~90% chance of a hike. Warsh’s presser follows. Eurozone CPI and US housing data and initial jobless claims will be released on Thursday. We also have the BoE rate decision; the broad expectation is for a hold given the economic backdrop, although the meeting is likely to be closely watched for any shift in its assessment of renewed inflationary pressure. Friday brings the BoJ’s policy decision, where a 25bp increase to 1.25% is widely expected, and later we have euro area consumer inflation expectations and US industrial production.
Global financial markets came under significant pressure last week as escalating geopolitical tensions in the Middle East disrupted energy flows and pushed Brent crude close to $110pb. Brent ultimately closed the week at $104.61pb, up 8.65%. The resulting increase in energy costs heightened inflation concerns and contributed to a sharp sell-off in government bonds. The 10-year US Treasury yield rose 19bp to 4.97%. Equities also weakened, with the S&P 500 falling 0.80% over the week. Meanwhile, the US dollar (DXY Index) remained supported, closing the week only marginally lower.
In the US, market expectations shifted toward a more hawkish Fed stance. Sticky inflation, higher energy prices and resilient labour-market conditions have increased the probability of a September rate hike, with Fed funds futures pricing a ~90% chance of a 25bp rate hike this week. Headline CPI inflation accelerated to 0.4%mom (3.4% annually), largely driven by a sharp 2.1% surge in energy costs. Meanwhile, PPI inflation ticked up to a 5.4% annual pace, with energy prices accounting for more than three-quarters of the increase in final-demand goods prices. Later the preliminary September University of Michigan Consumer Sentiment Index missed expectations, dropping sharply to 47.8, amid rising gas prices and trade friction. Year-ahead inflation expectations simultaneously jumped to 4.6%, adding to fears of stagflation and reinforcing expectations of Fed rate hikes.
In China, the PBOC and State Council held briefings outlining financial policy priorities for the 15th Five-Year Plan (2026–2030). Officials highlighted efforts to expand the international use of the renminbi by strengthening cross-border RMB payments, expanding bilateral local-currency settlement and currency-swap arrangements, and further opening China’s financial markets to overseas investors. The PBOC also reiterated its commitment to a market determined exchange rate while stating that China has neither the need nor the intention to use currency depreciation to gain a trade advantage. The framework places greater emphasis on improving market-based interest rate formation, transmission and communication, while maintaining the RMB broadly stable at a reasonable and balanced level.