The financial week closes with a macroeconomic picture that is increasingly difficult to classify. The US economy continues to show a decent degree of resilience, but slowing demand coexists with a new inflationary impulse coming from energy. It is not yet a recession, nor is it the linear "soft landing" on which markets had built part of their summer valuations.
The result is an almost stagflationary environment: less brilliant growth, inflation under pressure once again, and central banks forced to maintain restrictive financial conditions.
This Week's Data: Confidence Slows, Prices Do Not
In the United States, the NFIB Small Business Optimism Index fell in August by 1.1 points to 98.7, remaining just above its long-term historical average. The data points to reduced optimism regarding sales and investments, but not yet a widespread contraction in activity.
Meanwhile, the labor market retains remarkable strength. Initial weekly jobless claims decreased to 206,000 from the previous week's revised 207,000. Layoffs therefore remain contained, even if the pace of hiring is less intense compared to the post-pandemic phase.
Moderately positive signals also came from wholesale inventories, which increased by 1.3% in July, while sales grew by 0.8%. Inventory accumulation could accounting-wise support third-quarter GDP, after having subtracted 0.72 percentage points from the previous quarter's growth. However, in the presence of weaker consumption, elevated inventories can subsequently turn into a drag on production.
The most important signal, however, came from producer prices. In August, US PPI grew by 0.4% month-over-month and 5.4% year-over-year; goods recorded an increase of 1.1%, compared to just 0.1% for services. The acceleration is therefore concentrated mainly in material and energy costs, but risks progressively transferring onto consumer prices and corporate margins.
This combination—falling confidence, resilient employment, and elevated producer inflation—makes the Federal Reserve's task particularly complex.
US CPI: Today's Decisive Data
At 2:30 PM Italian time, the August US CPI is expected. Consensus indicates:
| Indicator |
Expected |
Previous |
| Monthly CPI |
+0.4% |
+0.1% |
| Annual CPI |
3.4% |
3.4% |
| Monthly Core CPI |
+0.2% |
+0.2% |
| Annual Core CPI |
2.4% |
2.5% |
The headline index is expected to be affected by the price increases in fuels, food items, and transportation. The core component, by contrast, could continue to slow, supported by the progressive moderation of housing costs.
For the markets, the composition of the data will be crucial:
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A Core CPI at or below 0.2% monthly would soften the negative signal from energy. It could favor short-term Treasuries, utilities, healthcare, and quality growth stocks.
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A Core CPI of 0.3% or higher, accompanied by widespread increases in services, would reinforce the scenario of a hawkish Fed. The dollar and yields could rise, while technology, real estate, and heavily indebted companies would be more vulnerable.
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A high Headline CPI but a moderate Core CPI would likely produce a more uncertain reaction: energy inflation that is difficult to control via interest rates, but still capable of squeezing consumption and margins.
Michigan: Pay Attention to Inflation Expectations
At 4:00 PM Italian time, the preliminary September estimate from the University of Michigan will arrive. The headline index closed August at 51.7, while the expectations component is expected to drop to around 50.5 from the previous 51.5.
Even more important will be inflation expectations: in August, one-year expectations stood at 4.0% and five-year expectations at 3.3%. A new increase would indicate that the energy shock is altering household perception. For the Fed, this variable is crucial. Less anchored expectations can influence wages, prices, and spending decisions, increasing the risk that a price surge initially concentrated in energy turns into persistent inflation.
ECB: Preemptive Tightening Against the Energy Shock
On September 10, the ECB increased its three key policy rates by 25 basis points. The deposit facility rate rose to 2.50%, the main refinancing operations rate to 2.65%, and the marginal lending facility rate to 2.90%, effective September 16.
Frankfurt reacted to the surge in oil and gas and to the risk of energy inflation spreading to the rest of the consumer basket. The new projections indicate average inflation of around 3% in 2026, 2.5% in 2027, and 2.1% in 2028, while Eurozone growth is forecasted at 0.9% in 2026 and 1.4% in 2027.
The ECB thus chose a preemptive tightening, albeit without committing to a new continuous cycle of hikes. The most likely consequence is increased pressure on rate-sensitive European sectors and real estate, while banks and energy could benefit respectively from higher net interest margins and supported commodity prices.
Fed and BOJ: The Week of Decisions
The Federal Reserve will meet on September 15 and 16, with the decision published on the 16th. The event will also include updated economic and rate projections.
The market is divided between maintaining the current 3.50%–3.75% target range and a 25 basis point hike. Following the PPI data and the oil surge, the probability assigned to a rate hike has grown significantly. A subdued Core CPI could still favor a pause; a higher-than-expected reading would make a hike much more likely.
The Bank of Japan will decide on September 18, at the conclusion of its September 17–18 meeting. The prevailing consensus points to a 25 basis point hike, from 1% to 1.25%, supported by Japanese producer inflation running at 7.6% annually, rising import costs, and the risk of yen weakness.
A BOJ rate hike could strengthen the yen and reduce the appeal of yen-funded carry trades. This represents a potential factor of volatility for tech stocks, emerging markets, and highly leveraged assets.
Essential Calendar for Next Week
| Date |
Event |
Possible Impact |
| September 14 |
US Industrial Production |
Cyclicals, US Dollar, and Treasuries |
| September 15 |
FOMC Meeting Begins |
Volatility across rates and currencies |
| September 16 |
US Retail Sales |
Indications on consumer resilience |
| September 16 |
Fed Decision & New Projections |
Main event for equities and bonds |
| September 17 |
US Housing Starts, Permits & Jobless Claims |
Real estate and economic cycle |
| September 17–18 |
BOJ Meeting |
Yen, JGBs, and carry trade |
| September 18 |
BOJ Decision |
Asian markets and global liquidity |
Markets: The Cost of Capital Returns to Center Stage
The rise in oil prices and bond yields has already triggered a correction in risk assets. On September 10, the S&P 500, Dow Jones, and Nasdaq all lost roughly 0.6%–0.7%, while the 10-year Treasury yield rose close to 4.95%.
The most important phenomenon, however, is not a single trading session, but the return of an unfavorable correlation between stocks and bonds: when inflation rises due to an energy shock, bonds do not necessarily offset equity losses.
The most exposed companies are those with high valuations, earnings projected far into the future, debt to refinance, and low pricing power. The environment is relatively more favorable for businesses with stable cash flows, sustainable dividends, and the ability to pass costs on to customers.
Sectors with the Best 12-Month Outlook
In the baseline scenario—a slowdown without a deep recession and inflation remaining above target—the potential ranking for outperformance is:
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Energy: Favored by structurally elevated oil prices and capital discipline. However, it is the most vulnerable sector to a geopolitical resolution or a severe recession.
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Utilities: Stable demand, dividends, and investments in power grids, data centers, and energy infrastructure. The main risk is a further increase in real yields.
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Healthcare: Earnings growth relatively independent of the broader cycle, strong balance sheets, and more defensive valuations compared to technology.
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Consumer Staples: Resilient revenue and the ability to protect margins during a phase of waning consumer confidence.
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Defense and Infrastructure: Multi-year public spending and order backlogs that are less sensitive to the economic cycle.
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Quality and Minimum Volatility Equities: Profitable, low-debt companies with more predictable earnings.
Technology does not necessarily mean absolute underperformance: large platforms with strong cash generation can continue to grow. However, with 10-year Treasuries near 5%, high valuations reduce the margin of safety, especially for cyclical semiconductors and companies that are not yet profitable.
US ETFs Accessible via Alpaca
The following instruments are US-listed ETFs normally tradable via Alpaca, subject to instrument "tradable" status, client residence, and account limitations.
| Theme |
ETF |
Ticker |
Role in Scenario |
| US Energy |
Energy Select Sector SPDR |
XLE |
Partial hedge against energy inflation |
| Utilities |
Utilities Select Sector SPDR |
XLU |
Stable cash flows and defensive profile |
| Healthcare |
Health Care Select Sector SPDR |
XLV |
Lower sensitivity to the economic cycle |
| Consumer Staples |
Consumer Staples Select Sector SPDR |
XLP |
Relatively inelastic demand |
| Defense & Aerospace |
iShares U.S. Aerospace & Defense |
ITA |
Military spending and multi-year order books |
| US Quality |
iShares MSCI USA Quality Factor |
QUAL |
High profitability and manageable debt |
| Low Volatility |
iShares MSCI USA Min Vol Factor |
USMV |
Reduction of equity cyclicality |
| Intermediate Treasuries |
iShares 7-10 Year Treasury Bond |
IEF |
Potential benefit if economic slowdown prevails |
| TIPS |
iShares 0-5 Year TIPS Bond |
STIP |
Protection from short-term realized inflation |
A balanced portfolio construction should not focus on a single forecast. Energy and STIP respond best to an inflationary scenario; utilities, healthcare, staples, and USMV to an orderly slowdown; IEF to a subsequent decline in growth and interest rates. QUAL, meanwhile, maintains a more selective equity exposure.
In Summary
The scenario over the next twelve months is not that of an already inevitable recession, but of an economy entering a later, more fragile phase of the cycle. The labor market currently limits the risk of an immediate contraction, while confidence, consumption, and borrowing costs point to a progressive slowdown.
The biggest threat is that the energy shock forces the Fed, ECB, and BOJ to tighten monetary policy just as growth loses momentum. In this phase, outperformance could shift away from stocks reliant on multiple expansion toward energy, defensive sectors, quality names, and companies generating immediate cash flows.
The CPI and University of Michigan inflation expectations will set today's starting point. Next week, the Fed and the BOJ will determine how much higher borrowing costs must go to prevent the energy shock from morphing into structural inflation.
*Indications regarding sectors and ETFs represent a scenario analysis and do not constitute personalized financial advice.
