Weekly house view | Fed waiting for CPI to decide
The week in review
US employment and services sector data came in stronger than expected, but it will be this week’s consumer price inflation (CPI) figures that will be crucial for the Federal Reserve’s decision on whether or not to raise interest rates.
Last week’s robust data came despite the slowly escalating Iran conflict, which saw the US military strike three Iranian tankers after Iran launched missiles towards two US Navy warships. The conflict is hitting energy markets, with European natural gas prices hitting their highest since 2023 and euro area inflation accelerating to 3.3%.
In Germany, the far-right Alternative für Deutschland (AfD) party surged to first place in regional elections in the eastern state of Saxony-Anhalt, dealing a big setback to the established political parties.
In Russia, President Vladimir Putin said his country had many friends in the US and that there are chances the Ukraine conflict could be resolved.
In the corporate world, Volkswagen said another 50,000 positions worldwide will be cut. Shares in cloud data company Snowflake surged 22% as generative artificial intelligence (AI) adoption accelerated platform consumption. In the private credit sector, Blackstone said it would limit withdrawals from its private credit fund to 5% of the fund's shares. Cliffwater's flagship private credit fund also capped redemptions, after investors sought to pull about 16%, showing issues in private debt markets.
Quote of the week
“I think AI will probably increase the global economy by 20 to 30%. That’s my rough estimate,” Tesla and SpaceX CEO Elon Musk said at a G20 event.
Key data
The Institute for Supply Management's (ISM) purchasing managers index (PMI) for services providers rose to 55.4% in August 2026, marking the strongest pace of expansion in six months. The ISM manufacturing PMI fell to 54.6 with a prices paid index remaining high. The August US nonfarm payrolls report showed 162,000 jobs added against a consensus of around 55,000.
Japan's services sector grew at its fastest pace in five months in August.
Swiss inflation data surprised to the upside at 0.8%, but underlying core came in at just 0.4. We expect the SNB to remain on hold during 2027.
