Week commencing 14 September 2026

Rising yields and oil prices pressure global equities

United States (US) equity markets are set to finish the week lower after a warmer-than-expected producer price index (PPI) print, surging energy prices and higher bond yields tightened their grip on stocks. The S&P 500, US Tech 100 (Nasdaq 100) and Dow Jones have all been under pressure, with the S&P 500 on track for its deepest four-day decline since June as WTI crude oil punched above $100 and the US 10-year yield closed in on 5%.

Closer to home, ASX 200 is trading 300 points (-3.32%) lower for the week near 8706. The sell-off followed a weak lead from Wall Street as bond yields and energy prices ratcheted higher, compounded by a double dose of hawkish Reserve Bank of Australia (RBA) commentary and Tuesday's weak consumer and business confidence data. Information technology (IT), consumer discretionary and materials stocks have borne the brunt of the decline, while utilities and energy are the only sectors set to finish higher for the week.

The week that was: highlights

• In the US, August PPI accelerated to 5.4% year-on-year (YoY) from 4.8%, slightly above the 5.3% expected, while core PPI rose to 4.6% from 4.2%, in line with expectations
• Initial jobless claims eased by 1,000 to 205,000 last week
• Japan's finalised second quarter (Q2) annualised gross domestic product (GDP) growth reached 1.4%, exceeding the consensus forecast of 1.1%, while quarterly growth held at 0.4% quarter-on-quarter (QoQ), in line with expectations
• China's inflation rate rose to 0.8% YoY in August, matching the consensus forecast, while the PPI increased 3.8% YoY against expectations of 3.7%
• Also in China, the trade balance reached US$119.1 billion in August, matching forecasts and supported by a 25% YoY increase in exports, while import growth eased to 28.2% YoY against a 30% consensus forecast
• In Europe, the European Central Bank (ECB) raised its key lending rates by 25 basis points (bp), as expected, and made hawkish revisions to its inflation forecasts
• UK housing data showed the Lloyds House Price Index falling 0.2% month-on-month (MoM) in August versus expectations for a 0.2% rise, while the Royal Institution of Chartered Surveyors (RICS) House Price Balance came in at -28% compared with the -31% forecast
• Turning to Australia, consumer sentiment weakened as the Westpac-Melbourne Institute Consumer Sentiment Index dropped 5.2% MoM to 84.4 in September
• Staying in Australia, National Australia Bank (NAB) business confidence slipped deeper into negative territory, printing at -8 in August, down from -6 previously
• WTI crude oil rose 12.68% this week to $103.07
• The US dollar index (DXY) eased 0.08% this week to 99.08
• Bitcoin fell 4.50% this week to $76,687
• Gold fell 2.45% this week to $4321
• Wall Street's gauge of fear, the volatility index (VIX), surged to 17.85 this week from 14.52 the previous week.

Key dates for the week ahead

Australia & New Zealand

• NZ – current account (Q2): Wednesday, 16 September at 8.45am AEST
• NZ – GDP growth rate QoQ (Q2): Thursday, 17 September at 8.45am AEST
• NZ – trade balance (August): Friday, 18 September at 8.45am AEST

China & Japan

• CN – new yuan loans (August): Monday, 14 September
• CN – house price index YoY (August): Tuesday, 15 September at 11.30am AEST
• CN – industrial production YoY (August): Tuesday, 15 September at 12.00pm AEST
• CN – retail sales YoY (August): Tuesday, 15 September at 12.00pm AEST
• CN – fixed asset investment (year-to-date) YoY (August): Tuesday, 15 September at 12.00pm AEST
• JP – inflation (August): Friday, 18 September at 9.30am AEST
• JP – Bank of Japan (BoJ) interest rate decision: Friday, 18 September at 1.00pm AEST

United States

• US – retail sales (August): Wednesday, 16 September at 10.30pm AEST
• US – Federal Reserve (Fed) interest rate decision: Thursday, 17 September at 4.00am AEST
• US – preliminary building permits (August): Thursday, 17 September at 10.30pm AEST
• US – housing starts (August): Thursday, 17 September at 10.30pm AEST

Europe & United Kingdom

• UK – unemployment rate (July): Tuesday, 15 September at 4.00pm AEST
• UK – inflation rate (August): Wednesday, 16 September at 4.00pm AEST
• UK – Bank of England (BoE) interest rate decision: Thursday, 17 September at 9.00pm AEST
• UK – retail sales MoM (August): Friday, 18 September at 4.00pm AEST

Key events for the week ahead

US: Fed interest rate decision

Date: Thursday, 17 September at 4.00am AEST

At its last meeting on 29 July, the Fed left the federal funds rate unchanged in the 3.50% - 3.75% range, as widely expected. The decision came on a 9-3 vote, with Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan dissenting in favour of a 25 bp hike. The statement noted that inflation remains elevated, partly due to energy supply shocks linked to the Middle East conflict, and the overall tone was slightly more dovish than feared.

Since then, Chair Kevin Warsh has used his Jackson Hole speech on 28 August to reset the tone. He said progress on inflation over the past two years had been modest, that recent readings did not suggest underlying trends had meaningfully improved, and that if the Fed is not confident inflation is moving towards 2% 'clearly and at sufficient speed', it has 'work to do'.

That has since been followed by surging oil prices, a firmer August non-farm payrolls report and a stronger-than-expected PPI print, with some components pointing to a firmer personal consumption expenditures (PCE) reading later this month.

Markets head into tonight's consumer price index (CPI) report pricing roughly a 70% chance of a rate hike next week to 3.75% - 4.00%. A hotter-than-expected CPI print, for example core inflation at 0.3% MoM, would likely be the final confirmation the market needs that the Fed will raise rates next week. Conversely, a 0.1% reading should be soft enough to see the Fed keep rates on hold.

Fed funds rate chart

UK: BoE interest rate decision

Date: Thursday, 17 September at 9.00pm AEST

At its July meeting, the BoE left Bank Rate at 3.75%, with three of the nine Monetary Policy Committee (MPC) members voting for a 25 bp hike.

This week Governor Andrew Bailey used a Treasury Committee hearing to push back on the idea that a hike is only a matter of time, saying the market curve contains a risk premium for a worse energy outcome rather than a hidden BoE plan, and that any move still hinges on incoming data and geopolitical developments.

The BoE has been more willing than the Fed or ECB to look through the first-round oil shock and wait for evidence of second-round effects. That is why the rates market is pricing only a 25% chance of a hike next week. A full 25 bp move is priced for November and another 25 bp is priced for December, which would take Bank Rate to 4.25% by year end.

BoE official bank rate chart

JP: BoJ interest rate decision

Date: Friday, 18 September at 1.00pm AEST

At its June meeting, the BoJ raised its short-term policy rate by 25 bp to 1.00%, the highest level since 1995, before holding rates steady on 31 July in an 8-1 vote, with Hajime Takata the lone dissenter in favour of an immediate move to 1.25%.

Governor Kazuo Ueda used the July press conference to strengthen the message, saying inflation risks were skewed to the upside, the yen's impact on prices appeared larger than in the past and that, if policy remained too accommodative, the BoJ could accelerate the pace of hikes. He has since made clear the board will consider a rise at every meeting, including this one.

The inflation backdrop since July has strengthened rather than faded. National core CPI, excluding fresh food, accelerated to 1.8% YoY in July from 1.6% in June, the fastest pace since January, even though fuel subsidies kept the reading below the 2% target. The BoJ's preferred underlying gauge, excluding fresh food and energy, rose to 1.9% from 1.7%.

Hawkish rhetoric has done the rest. US Treasury Secretary Scott Bessent has publicly endorsed faster Japanese policy normalisation, while board member Takata has not ruled out consecutive hikes or a larger move.

Heading into the meeting, markets are pricing a 90% chance of a 25 bp hike to 1.25% next week, with a second 25 bp increase to 1.50% around 70% priced by December.

BoJ cash rate chart