In briefWhat you need to know
- US CPI rose 0.4% in August and 3.4% year-on-year, but core inflation's annual rate eased from 2.5% to 2.4%.
- Fed funds futures priced in around an 87% probability Monday of a 0.25-percentage-point rate hike Wednesday evening.
- Wednesday brings US retail sales, EIA oil inventories and the Fed's rate decision together — with new projections and Kevin Warsh's press conference at 2:30pm ET.
- The ECB just raised its deposit rate to 2.50%, and several central bank speakers this week could signal whether that was the final step.
- Thursday's eurozone CPI is expected to confirm 3.3% annual growth, while the Bank of Japan is expected to raise rates Friday morning.
- No Magnificent Seven earnings this week leaves the macro picture with unusually little competition from company news.
US stocks recovered Friday, but the S&P 500 and Nasdaq still ended a weak week. At the same time, the 10-year yield sat near five percent and oil traded above $100.
US consumer prices rose 0.4 percent in August and 3.4 percent year-on-year. Core CPI rose 0.3 percent on the month, but the annual rate eased from 2.5 to 2.4 percent. In other words, this wasn't a broad inflation shock. The problem was the composition: energy rose 2.1 percent, gasoline 3.9 percent and heating oil 10.1 percent in a single month.
The figures came a day after producer prices showed 5.4 percent annual growth. Combined with the oil price and a still-stable labor market, that was enough to move the rates market. On Friday, Fed funds futures priced in more than an 80 percent probability of a 0.25-percentage-point hike, according to Reuters. By Monday, pricing had risen to around 87 percent.
Monday: the ECB tries to explain the road ahead
The week starts without major US data, but with several speeches from the European Central Bank. Isabel Schnabel, Piero Cipollone and Christine Lagarde are all on the ECB's official calendar.
The speeches come just four days after the ECB raised its key rates by 0.25 percentage points. The deposit rate now stands at 2.50 percent. The central bank projects inflation at 3.0 percent in 2026 and growth at 0.9 percent. The ECB stressed that inflation risks point upward, while growth risks point downward.
For European rate and index futures, the question is whether 2.50 percent is a temporary pause or just the next step. Hawkish signals from Lagarde or Schnabel could lift Bund yields and support the euro, while also pressuring European equities.
Tuesday: China and German expectations
Tuesday is the most important day for the commodity and growth picture ahead of the Fed. China publishes industrial production, retail sales, investment and unemployment. Industrial production is expected to rise 4.8 percent year-on-year, while retail sales are expected up a modest 0.8 percent. Investment growth is still expected to be negative.
Stronger industry without matching consumption could support commodity demand, while also confirming that Chinese growth remains unbalanced.
In Europe, the German ZEW index is expected to rise from 34.2 to 40, while the assessment of the current situation stays very weak. That fits a European picture where expectations improve faster than actual industrial output.
Wednesday: retail sales first – the Fed last
Wednesday is by far the week's most important trading day. At 2:30pm CET, US retail sales are published. Headline sales are expected up 0.8 percent in August after a 0.6 percent drop in July, while sales excluding autos are expected up 0.5 percent.
A strong report could show the economy can withstand higher rates, but would also make it harder for the Fed to argue for caution. A weak report could support Treasury futures, but wouldn't necessarily help ES if the energy shock hits real incomes. The Census Bureau publishes the report.
At 4:30pm CET comes the EIA's weekly oil inventories. The market expects a drawdown in crude, gasoline and distillate stocks alike. After the sharp oil rally, the inventory data carries extra weight: new draws could reinforce supply concerns, while a build could trigger profit-taking. Geopolitics and shipping traffic through Hormuz could still overshadow US inventory moves.
At 8:00pm CET comes the rate decision. The Federal Reserve confirms that the 15–16 September meeting includes new economic projections. A 0.25-percentage-point hike would lift the target range from 3.50–3.75 to 3.75–4.00 percent.
The hike itself is largely priced in. What matters is therefore the rate path, the inflation projections and Warsh's message at 8:30pm CET. If the median projection points to further hikes, Treasury futures could fall further, the dollar could strengthen, and NQ could face more pressure than ES. A "cautious hike," where Warsh stresses uncertainty and leaves the door open to a pause, could produce the opposite reaction.
Thursday: Europe confirms the inflation picture
Thursday finally brings eurozone CPI. Annual growth is expected to be confirmed at 3.3 percent and core inflation at 2.4 percent. Large revisions are unusual, but the components will be scrutinized after the ECB's rate hike. The market will watch how much of the increase is driven by energy, and whether services inflation is still too sticky.
From the US come jobless claims, housing starts, building permits and the Philadelphia Fed's manufacturing index. Each release is normally secondary after an FOMC meeting, but together they can test whether Warsh's read on growth holds up.
Friday: industry and the Bank of Japan close out the week
Friday, US industrial production is expected to rise 0.3 percent, while capacity utilization is expected up to 76.4 percent. A strong reading after high retail sales would support the picture of a robust economy, but could also lift rates further. Weak figures would give a more stagflation-flavored picture if the oil price stays high.
Before Europe opens, the Bank of Japan's rate decision is due. An expected hike from 1.00 to 1.25 percent could strengthen the yen and stir movement in global bonds.
There are no Magnificent Seven earnings this week. That leaves the macro picture with unusually little competition from company news. For NQ, ES, gold and Treasury futures, Wednesday evening is the natural center of gravity. For oil, the risk is more continuous: every headline on production, pipelines or shipping can shift the price picture before the calendar gets a chance to.
This week's central question isn't just whether the Fed raises rates. It's whether the central bank frames the hike as a necessary insurance policy against energy-driven inflation — or the start of a new tightening cycle. That distinction could decide whether Friday's stock-market rebound continues, or whether rate jitters take back control of the futures market.
Risk note
This is general market commentary, not personal investment advice. Futures are leveraged instruments carrying a high level of risk.