Macro Week Ahead: Core inflation locks the Fed into a hike as three central banks crowd into one week

Good Sunday to you all,

We closed last week's issue describing a calendar "crammed into the Thursday–Friday block". The block was as hard as expected, but the outcome did not reverse the expectation — it reinforced it. August's inflation data held no surprise at the headline; the surprise was in the core, and that single decimal lifted the market-implied probability of a Fed hike at this week's meeting to around 90%. A week ago the question was whether a hike was even on the table; now it has become what happens after the hike.

At home the story decoupled clearly from the global picture. The CBRT held the policy rate at 37% while Borsa İstanbul closed the week up 3.25% — that is, the BIST rose while US equities fell on inflation worries. Behind that divergence lie both the removal of uncertainty around the rate decision and the low base created by the previous week's 4.30% loss. The real-economy data, however, does not carry the same optimism: July industrial production fell 0.3% year-on-year, its third consecutive decline.

Macroeconomics · Geopolitics · Global

1 A single decimal in core inflation set the tone for the week. US consumer prices rose 0.4% month-on-month and 3.4% year-on-year in August — the annual rate was unchanged from July and in line with expectations. The main driver at the headline was gasoline: the gasoline index rose 3.9% on the month and by itself explained more than a third of the total monthly increase. The energy index ran well above the headline at 16.3% year-on-year, while food rose only 0.1% on the month and 2.7% on the year. The critical detail sits in the core: excluding food and energy, the monthly increase came in at 0.3% against the expected 0.2%, with annual core at 2.4%. Central banks can usually treat an energy-driven headline increase as transitory; a core overshoot removes that comfort.

2 Producer inflation surprised in the other direction. A day earlier, Thursday's August producer price index fell 0.1% on the month — expectations were for a 0.3% rise, after a 0.7% increase the previous month. Both headline and core PPI declined unexpectedly. That is a signal at odds with the stickiness on the consumer side: cost pressure is easing further up the production chain while the prices passed on to consumers stay sticky. The fact that the two readings do not agree is one reason the message the Fed delivers this week matters as much as the decision itself.

3 The Fed hike is priced; the real question is what follows. Futures markets put the odds of a 25 basis point hike at the 16 September meeting in the 87–90% range. The policy rate has been parked in the 3.50–3.75% band since December 2025; a hike would end that long pause with a change of direction. For markets, though, what matters is less the decision than the updated dot plot and Fed Chair Kevin Warsh's message afterwards. The difference between a one-off "insurance hike" and the start of a tightening cycle produces very different scenarios for both Treasury yields and emerging market assets.

4 Treasury yields are at a multi-year high. The US 10-year yield rose to 4.975%, its highest in years. That level is a quiet but constant weight on equity valuations, pulling the discount rate up directly for growth stocks valued on long-dated cash flows. Net outflows of $32.27 billion from US equity funds over the same period show the pressure is also showing up in fund flows. On the sentiment side, the preliminary Michigan consumer confidence reading at 47.8 — well below the expected 51.0 — completes the picture.

5 Wall Street closed the week lower but rebounded on Friday. Friday's session broke a four-day losing streak: the Dow closed up 0.98% at 52,573.29, the Nasdaq up 0.96% at 26,333.04 and the S&P 500 up 0.86% at 7,656.98. Even so, all three indices were negative on the week — versus the previous Friday's close the S&P 500 fell roughly 0.8%, the Nasdaq 0.7% and the Dow 1.6%. Technology, industrials and communication services led Friday's advance; healthcare and utilities lagged. Energy stocks diverged with oil's intraday pullback.

6 The ECB hiked for a second time and Lagarde did not hesitate. The European Central Bank raised its rate to 2.5% on 10 September — its second consecutive hike. Lagarde described the decision as a "no-brainer" and markets immediately began pricing further increases. The ECB's reasoning is familiar: the Iran-driven war is pushing inflation up and growth down through energy prices. This is the textbook supply-shock dilemma — a rate hike does not resolve supply-driven price pressure, it only suppresses demand; what it does is stop inflation expectations from drifting off their anchor.

7 The Houthis took Mokha and oil stayed above $100. The geopolitical risk premium widened through the week. While Iran continued to target vessels in the Strait of Hormuz, Iran-backed Houthi forces seized Yemen's port of Mokha and a strategic island, opening a new front along the Bab el-Mandeb route. With two of the world's most critical energy chokepoints under pressure at once, supply-disruption fears became entrenched: Brent rose about 8.4% in five sessions to touch $103, taking its monthly gain to 16.5%. WTI's 2.29% pullback to $100.13 on Friday suggests part of that premium was handed back to profit-taking.

8 The buffer on the supply side has thinned. Structural factors are making it easier for prices to hold these levels. The US Strategic Petroleum Reserve has fallen below 290 million barrels after emergency releases — its lowest since 1982 — meaning the tool Washington can use to push prices down has shrunk markedly. OPEC+ has completed the unwinding of its voluntary production cuts and approved additional supply for September; against that, China is acting as a balancing force on the demand side by cutting crude imports and refinery run rates. In short, the factors that could pull prices lower exist, but spare buffer capacity is historically low.

9 In Türkiye: rates on hold, industry weak, current account a surprise. At its 10 September meeting the CBRT held the policy rate at 37%; the overnight lending rate stayed at 40% and the overnight borrowing rate at 35.5%. The statement stressed that the tight stance will be maintained until price stability is achieved and explicitly flagged geopolitical risks coming through energy prices. The real economy looks weaker: July industrial production fell 1% on the month and 0.3% on the year, extending the annual decline to a third consecutive month. Mining contracted 2.2% monthly and 3.8% annually, electricity and gas 2.2% monthly and 5.6% annually; manufacturing grew 0.3% year-on-year, not enough to carry the picture alone. On the other hand the current account posted a $36 million surplus in July; the 12-month cumulative deficit stands at $40.7 billion.

A calm week for the lira and gold. The dollar/lira closed the week up 0.34% at 48.4605 and the euro/lira up 0.38% at 56.4710 — the currency front stayed relatively quiet alongside the sharp move in oil. Gram gold fell 0.87% to ₺6,830 and the quarter gold coin 0.83% to ₺11,190. Among funds, equity funds were the best performers at 2.74%, while mutual funds returned 0.87% overall and pension funds 1.54%.

Sectors

1 Refiners won, airlines lost. Oil settling above $100 produced a clean split across sectors: US energy refiners pushed to 52-week highs while airlines drew analyst downgrades on higher fuel costs. That spread shows an energy shock is not a one-directional piece of bad news; it redistributes within the market. For Türkiye the equation is more one-sided: in a net energy-importing economy, cost pressure in transport and energy-intensive industry will become visible in the coming earnings season.

2 Technology is caught between rising yields and artificial intelligence. Technology leading Friday's rebound shows the theme still has force. But a 10-year yield at 4.975% is a direct discount-rate weight on valuations built on long-dated cash flows. In Finvox data, QQQ's historically weak September seasonality (average −2.79%, win rate 40%) and a regime that has been CHOPPY for 22 weeks mean that tension shows up at the index level as a lack of direction.

3 The BIST rebound was broad-based. The index's 3.25% weekly gain recovered a good part of the previous week's 4.30% loss. Removing the uncertainty around the rate decision was supportive for banks and rate-sensitive names. That said, a third consecutive monthly decline in industrial production leaves a question mark over how sustainable the rebound is for stocks tied to the real economy.

Companies

1 Oracle backed the AI theme with numbers. The strongest corporate read of the week came from Oracle: cloud revenue rose 62% year-on-year and the company announced more than $30 billion in new AI cloud contracts. That is a clear yes to the question we asked last week — whether AI capital spending is showing up in revenue. The size of the number suggests the data centre investment cycle has not slowed, at least on the cloud infrastructure side.

2 Fund flows contradict the theme. Despite Oracle's strong numbers, $32.27 billion of net outflows from US equity funds shows investors are watching rates, not the story. That divergence — strong company data, weak fund flows — is a classic marker of a rising-yield environment, and depending on the Fed's message this week it will either deepen or reverse quickly.

3 This week's earnings calendar is quiet. At home, Mavi Giyim (MAVI) reports on 16 September, offering a local read on how resilient consumer demand is under high inflation. In the US, 17 September brings FactSet (FDS) and homebuilder Lennar (LEN) — Lennar's numbers will be read immediately after the Fed decision for what rising mortgage rates are doing to housing demand. The real earnings density comes in the week of 22–24 September: AutoZone, General Mills, Micron, Jabil, Darden and Costco arrive back to back.

Week Ahead: Three central banks, three days

The shape of the week starting now differs from the last one. Last week the data decided; this week the decisions will. Monday and Tuesday should be relatively calm: retail sales and industrial production from China, the August budget balance from Türkiye. Then the Fed on Wednesday evening, the Bank of England on Thursday afternoon and the Bank of Japan on Friday morning. All three are expected to move in a tightening direction — which would make this one of the most synchronised tightening weeks in years for global liquidity.

The Week's Calendar

Monday, 14 September — Chinese retail sales and industrial production. The US macro calendar is quiet; the market is trimming positions ahead of the Fed.

Tuesday, 15 September — Türkiye's August budget balance. The FOMC begins its two-day meeting. Japanese industrial production and trade data.

Wednesday, 16 September — Fed rate decision and updated projections (21:00 Istanbul time), Chair Warsh's press conference (21:30 Istanbul time). US August retail sales and industrial production. TurkStat house price index. Earnings: MAVI (15:00).

Thursday, 17 September — Bank of England rate decision (14:00 Istanbul time; current rate 3.75%). Euro area inflation (12:00). CBRT monetary policy meeting summary. TurkStat housing sales statistics. US weekly jobless claims. Earnings: FactSet, Lennar.

Friday, 18 September — Bank of Japan rate decision (02:30 Istanbul time); Reuters expects a 25 basis point hike to 1.25%. German inflation data (09:00).

Just beyond the week: the earnings cluster of 22–24 September (AutoZone, General Mills, Micron, Jabil, Darden, Accenture, Costco). On the credit rating front, the next sovereign review is S&P Global Ratings on 16 October.

Five Things to Watch

1 The Fed's path after the hike. Because a 25 basis point hike is largely priced, what moves markets will be the dot plot and Chair Warsh's language. A message framing this as a one-off adjustment could bring yields back down and risk appetite back up. A signal that a series is starting would push yields above 5% and create a fresh wave of pressure on growth stocks and emerging market assets.

2 How sticky core inflation is. One month of core overshooting expectations is not a trend; but with PPI falling unexpectedly in the same month, where the cost pressure is coming from has become blurred. Energy settling in the $100 band is a risk that could raise pass-through into the core in the months ahead. This week's retail sales data will give the first clue on how much of that cost demand can absorb.

3 Hormuz and Bab el-Mandeb under pressure at once. The Houthi seizure of Mokha added a second front to Iran's activity in Hormuz. Two chokepoints under pressure simultaneously produce a qualitatively different risk profile from tension at a single point. The question to watch is whether an actual, confirmed disruption to transit occurs; with the SPR at its lowest since 1982, the room for a policy response in that scenario is narrow.

4 Is the BIST's divergence sustainable? The index gained 3.25% while global risk appetite weakened. Removing the uncertainty around the rate decision is the short-term explanation; but a third decline in industrial production and rising energy costs are not supportive on fundamentals. Thursday's policy summary and housing sales are the local catalysts to watch. What a hawkish Fed message does to emerging market flows will be the real test of the divergence.

5 The BoJ's historic step and the yen. The Bank of Japan is expected to raise its rate to 1.25% — a notable level after decades of ultra-loose monetary policy. A stronger yen is a variable that could unsettle the yen carry trades that have run in global markets for years. The Fed and the BoJ tightening in the same week means a simultaneous squeeze in global liquidity conditions, and that is felt most in emerging market assets.

Technical Picture

The levels below are taken from Finvox asset summaries and indicators; the date in parentheses is the data date of the record in question.

SPY — key level 779.37 (spot 765.91 · 25 August; indicator record 764.29 · 27 August). Holding above the 779.37 resistance would be expected to strengthen upward momentum; below the 760.40 support, downward pressure would be expected to build. RSI at 58.6 leans bullish, but the MACD histogram is negative at −1.05 and price sits below the SMA20 (768.10). A CHOPPY regime running for 22 weeks (ADX 14.1) is limiting direction. The records predate Friday's close, so they need current confirmation.

QQQ — key level 722.03 (spot 716.31 · 9 September). A break of the 722.03 resistance would be expected to strengthen upward momentum; a break of the 702.70 support would be expected to increase downward pressure. RSI at 51.65 is neutral, price is squeezed between the SMA20 (717.28) and the pivot (718.61), with Bollinger bands at 702.84–731.71. September seasonality is negative (average −2.79%, median −5.22%, win rate 40%); October's average of +2.74% is friendlier.

XAU/USD — spot 4,348.87 (11 September). Gold has slipped below both the SMA20 (4,461.88) and the SMA200 (4,490.47), holding on only just above the SMA50 (4,342.20). RSI at 44.8 leans bearish and the MACD histogram is negative at −23.6. The lower Bollinger band at 4,256.55 is the short-term support zone to watch. ATR at 80.96 (~1.9%) means volatility is high. Note: the weekly LLM summary could not be produced for this asset due to low confidence, so the reading above rests on indicator data alone.

BTC/USD — key level 79,394.94 (spot 77,279.91 · 12 September). A break of the 79,395 pivot resistance would be expected to bring momentum towards the 81,478 target; a close below 76,264 weakens short-term support. RSI at 55 is neutral, price is below the SMA20 (78,599) but 10% above the SMA200 (70,106). The QUIET regime has a 73% chance of persisting. October seasonality is historically strong (average +16.2%, win rate 80%). A "golden cross" formed on 11 September as the 50-day EMA moved above the 200-day; as a lagging indicator it needs price confirmation above resistance.

Cross-read: all four assets have a negative MACD histogram and three of the four trade below their SMA20. In other words, none shows a confirmed upside momentum break. That means the week's direction will come not from the technical structure but from the three central bank decisions between Wednesday and Friday.

Closing

Last week showed how an inflation print can lock central bank expectations in a single direction. A one-decimal deviation in the core lifted the market-implied probability of a Fed hike at this week's meeting to around 90%; the ECB had already moved, and the BoJ is expected to follow. At the same time oil settled above $100 as tension escalated at two separate maritime chokepoints, keeping alive the classic supply-shock equation that makes central bankers' work harder.

Türkiye stood apart from that picture for a week: rates on hold, the market up 3.25%, the current account in a small surplus. But a third consecutive decline in industrial production suggests the divergence comes from the cycle rather than the fundamentals. In the week ahead the Fed on Wednesday evening, the BoE on Thursday and the BoJ on Friday arrive back to back. If global liquidity conditions are tightening simultaneously, this is the week we will see it most clearly in emerging market assets.

We wish you a healthy and profitable week.

This bulletin is not investment advice; it is a summary of data.