Week of September 14–18, 2026

In summary

• The FOMC voted unanimously to raise the Fed Funds Rate to 3.75–4.00% this week, as expected, and revised its GDP forecasts up to 2.3% from 2.2% for 2026 and to 2.4% from 2.3% for 2027 while cutting unemployment expectations to 4.1% from 4.3% for both years; Broad and Core PCE inflation were both revised higher for 2026, to 3.7% and 3.4% respectively, with 2027 projections unchanged.
• The Dot Plot points to one more hike this year to 4.00–4.25%, with two members favoring no further hikes and three calling for two more, and no changes expected in 2027 per the median dot; Chairman Warsh did not submit a projection, and the statement framed the hike as a means of returning inflation to the 2% target more quickly.
• The tone was more hawkish than expected with Core PCE now running above the 2% target for 65 consecutive months — the longest streak since the 30-year run that ended in 1996 — and markets repriced accordingly, with October hike odds moving to roughly 58% from 27% a week earlier; for the remainder of 2026 markets are pricing a 46% chance of one more hike and a 44% chance of two, while the 2-year Treasury yield has risen to 4.74%, implying roughly 3.5 hikes from current levels.
• Global 10-year government bond yields are at their highest levels since 2007–2008 in nearly every major market — since 1996 in Japan’s case — with Canada the lone exception, as many central banks remain in hiking mode; on Wednesday’s announcement the S&P 500, Russell 2000 and DJIA closed lower after Warsh’s press conference triggered a roughly 1% intraday swing, while the Nasdaq recovered to about even, the 2-year yield swung from -6bp to +6bp and the 10-year from -6bp to flat, Financials, Regional Banks, Housing and Energy lagged on a -3.2% decline in WTI, Semiconductors and AI held up, and the U.S. Dollar added +70bp.
• August Retail Sales rose +1.24% M/M, solidly above forecasts for +0.8%, with Core Sales up +1.21% — the best since September 2024 — and Total ex-Autos up +1.39%, all reversing July’s weakness; on a Y/Y basis Total Retail Sales are up +6.01%, Core +5.59% and ex-Autos +6.93%, with all three series at all-time highs on an absolute basis as well.
• By category, Gas Stations led on the month at +3.1% M/M followed by Non-Store Retailers at +2.6%, while Department Stores at -0.8% and Building Material/Garden Stores at -0.2% lagged; on a Y/Y basis every category is positive for the first time since May 2021, with Gas Stations up +21.0% and Miscellaneous Stores +14.0% against Food & Beverage and Grocery Stores at just +0.5%.
• Industrial Production was essentially flat in August at +0.02% M/M while Manufacturing Output fell -0.30%, the biggest dip since October 2025, with both missing forecasts for +0.3% gains as Autos and Computer & Peripheral Equipment weighed; the Industrial Production Index still inched up to 103.1, the highest since January 2019, and the Manufacturing Output Index pulled back to 99.1 from 99.4.
• Within the components, Autos fell -2.30% M/M for a third straight decline and are down -12.6% Y/Y, while Utilities rose +1.78% for a fifth consecutive gain and accelerated to +6.2% Y/Y, just behind Business Equipment at +7.10%; among high-tech categories, Computer & Peripheral Equipment fell -1.43% M/M, the biggest dip since October 2023, leaving it +5.5% Y/Y, while Communications Equipment rose +0.76% for a twelfth straight monthly gain and leads the group at +16.8% Y/Y.
• Import and Export Prices both rebounded in August, with Imports up +0.67% M/M against forecasts of +0.4% and Exports up +0.61% versus +0.5% expected, and notably neither increase was driven by fuel — Brent was down roughly -7% on the month; Export Prices are up +8.63% Y/Y while the Import Price Index hit an all-time high of 150.8, up +6.95% Y/Y, the most since August 2022.
• The import gains came from Computers, up +2.32% M/M for a tenth straight increase, and Capital Goods at +0.89% M/M, with every category except All Imports — which includes petroleum products — now higher for ten consecutive months; on a Y/Y basis Computers are up +19.09%, the highest on record, and Capital Goods accelerated to +7.26%, the most since 1988, while among petroleum-related products Natural Gas is up +102.60% and Fuels +46.83%.
• Business Inventories rose +0.81% M/M in July, above forecasts for +0.7%, with Merchant Wholesalers leading at +1.29% and Retailers’ Inventories building +0.78%, the highest since July 2024; the 6-month averages for Total and Merchant Wholesalers Inventories are at their highest since November 2022 after rising for seven and six straight months, and all three categories sit at new all-time highs on an absolute basis while accelerating Y/Y — Total +3.82%, the highest since May 2023, Retailers +3.85% and Merchant Wholesalers +5.73%, the highest since April 2023.
• Housing data remained weak as Building Permits declined across the board in August, with Total Permits ticking down to 1.394 million units SAAR against forecasts of 1.41 million, Single Family easing to 878,000 and Multi-Family to 467,000; Housing Starts also fell, slipping to 1.275 million units versus expectations of 1.31 million, as a rise in Single Family to 918,000 could not offset Multi-Family at 344,000, down from a multi-year high of 519,000 just two months ago.