This Weekly Macro Outlook highlights the key economic data releases, central bank events & speeches, and macro themes shaping global markets for the week of October 12, 2026.
Key Focus This Week:
- Central banks: RBA Minutes, Fed Chair Warsh IMF discussion, US Fed Beige Book
- Major data: US – CPI, PPI, & Retail Sales, Aus Labour Market
- Key themes: Middle East conflict developments, US mid-term election countdown
Recap of Last Week
The September FOMC Minutes provided further insight into the Committee’s decision to raise the FFR, with risk management emerging as a central rationale for the hike. While most participants viewed another hike this year as appropriate, recent Fed communications have emphasised flexibility over timing, with little urgency for consecutive hikes. This measured approach comes against a backdrop of persistent inflation risks and strengthening growth. This week’s US inflation data will provide a key input to the upcoming Fed meeting, helping policymakers assess the latest inflation trends against the “sufficient progress” threshold.
FOMC Minutes – Risk Management Hike
A shift in the balance of risks was the key driver of the unanimous decision to raise the FFR by 25 bps. Almost all participants assessed that inflation risks remained tilted to the upside, while labour market risks had diminished and become “broadly balanced”.
Inflation remained elevated, with “insufficient progress” on lowering inflation in recent months. Labor market conditions were seen as stable and viewed as close to full employment, although dynamism remained “unusually low”. Importantly, the growth backdrop was more resilient than expected, and underlying economic momentum appeared to have increased, led by robust business investment and resilient consumer spending. Financial conditions remained “supportive” of growth.
Rationale for the Hike: Committee members provided a range of reasons for the hike; however, “risk management” emerged as a central rationale for many participants:
“Many participants emphasised that a higher path for the target range would be “prudent” on risk-management grounds, providing “insurance” against inflation remaining persistently above target due to stronger-than-expected demand or further adverse supply shocks.” Source: FOMC Minutes, Sept 2026
At the time of the decision, the hike was framed as “reducing accommodation”. The Minutes reinforce this measured framing by emphasising prudence, risk management, and insurance against unanchoring inflation expectations. The decision reflects an effort to contain persistent inflation risks without signalling a shift towards a more urgent or aggressive tightening cycle at this stage.
Policy Guidance – While most participants viewed another hike this year as appropriate, the timing remained conditional on incoming data. Some “flexibility” over the timing for the next hike has been signalled in post-meeting speeches from Williams, Jefferson and, last week, Waller. Waller reiterated that while inflation is too high, and further hikes would be needed to support a timelier return of inflation to 2%, he noted that they need not occur at consecutive meetings, provided they were delivered within an acceptable period.
Market Signals
Market expectations for the path of rates have shifted since the September FOMC meeting. Current market pricing appears to be settling around a quarterly cadence of hikes through mid-2027, so far implying more cumulative tightening than the Fed’s current SEP for 2027 (Source: CME FedWatch). This suggests markets see some probability that further hikes may be required.
US & Global Data Backdrop
The Fed’s measured approach comes against a backdrop of persistent inflation and strengthening growth momentum. While it was a quiet data week, survey and PMI data continued to point to persistent price pressures alongside resilient activity – not only in the US, but also globally.
The US ISM PMI reports continued to point to notably more widespread price increases in September, while output and order activity continued to expand at a moderate pace. The NY Fed Short- & Medium-term Inflation Expectations Survey (Sep) recorded a further increase in median inflation expectations over the one- and three-year horizons. The year ahead inflation expectations increased by +0.3% pts to +3.9% and three-years ahead increased by +0.1% pt to +3.3%. Both of these reports will factor into the Fed’s broader inflation assessment to varying degrees.
Globally, the S&P Global PMIs showed composite output expanding at its fastest rate for over three years, led by both services and manufacturing sectors. At the same time, input price inflation continued to increase, with firms again passing on some of these higher prices.
The Week Ahead: What We Are Watching
The key focus in the week ahead is US inflation and growth.
So far, the data reinforce the broader inflation risks and strengthening growth backdrop facing the Fed. This week, the CPI, PPI and Beige Book will provide further evidence for the Committee to assess whether inflation is making sufficient progress towards its 2% target.
US spending and output data will also provide an update on Q3 growth momentum, as September releases begin to firm the growth estimate for the quarter.
US Inflation – CPI & PPI
In the latest Fed Minutes, the assessment of US inflation was made from many different angles – from measured inflation data to surveys and anecdotal reports. The important top-tier CPI and PPI reports for September will be the next key input for the upcoming Fed meeting. Together, these will provide an estimate of the preferred PCE inflation measure. While headline pressures will be important, the Fed has also noted caution around trends in core inflation, core goods inflation, and core services inflation ex-housing metrics.
Headline CPI is expected to increase more notably this month, while core CPI is expected to be unchanged.
- Headline CPI is expected to increase by +0.5% over the month in September, up from +0.4% in August. Based on this, annual headline CPI is expected to accelerate to +3.6% in September, from +3.35% in August.
- Core CPI is expected to increase by +0.2% over the month in September, from +0.3% in August. Based on this, annual core CPI is expected to be +2.43% in September, slightly lower than the +2.45% in August.
- Headline PPI is expected to increase by +0.5% over the month in September from +0.4% in August. Despite the higher monthly growth, annual PPI is expected to slow to +5.3% from +5.4% in August.
- Similarly, core PPI is expected to increase by +0.3% over the month, from +0.2% in August. Annual core PPI is expected to slow to +4.4% in September from +4.6% in August.
Fed Beige Book
Ahead of the next Fed meeting at the end of October, the latest Fed Beige Book will provide anecdotes from regional business contacts on growth and activity, spending, employment, and inflation.
US Growth Update – Retail Sales & Output
- US retail sales for September are expected to increase by +0.3% over the month, down from +1.2% in August. The control measure (the categories that feed into the GDP spending calculation) is also expected to moderate from the more robust +1.4% in August.
- US industrial production for September is expected to increase by +0.4%, from 0% in August.
- Also feeding into the Atlanta Fed GDP nowcast for Q3 growth will be export & import prices and business inventories.
Fed Speeches – Fed Chair Warsh
There will be a range of Fed speeches this week – the final week of speeches ahead of the blackout period next week. The next FOMC meeting is on 27-28 October.
The key speech this week will be Fed Chair Warsh in a discussion at the IMF meetings.
Australia – RBA Minutes & Labour Market
- The Minutes of the latest RBA meeting will be released – and should provide further insight into the deliberations and decision to hike the cash rate for a fourth time this year.
- The September Labour Market report is expected to show continued moderate employment growth of +20k, down from +39k in August. The unemployment rate is expected to be unchanged at 4.6%.
US Treasury Issuance: 12-16 October 2026
This week, the US Treasury will auction and settle approx. $681bn in T-Bills, Notes, and Bonds, raising approx. $91bn in new money.
A detailed version of this outlook, including the full calendar of key data releases, is available in the briefing document below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
For a structured, technical analysis outlook for global markets that complements this macro outlook, explore the latest Mars Market Update.
