TLDR
- The Federal Reserve is expected to raise rates by 25 basis points on Wednesday, with markets pricing in an 80-85% chance
- August retail sales data drops Wednesday morning, adding more pressure to an already volatile session
- Oil surged past $100 a barrel after drone attacks shut a key Saudi pipeline, raising inflation concerns
- Anthropic CEO Dario Amodei called for AI firms to slow development, sending AI-linked stocks lower across Asia and Europe
- The Bank of Japan is expected to raise rates to 1.25%, while the Bank of England is seen holding steady at 3.75%
The Federal Reserve kicks off its two-day policy meeting Tuesday, with a rate decision expected Wednesday at 2 p.m. ET. Markets are pricing in an 80% to 85% chance of a 25 basis point hike.
The case for a hike was strengthened last week after inflation data came in firm. The Consumer Price Index rose 3.4% year over year in August, matching July’s reading. Wholesale prices also came in hotter than expected.
Fed Chair Kevin Warsh holds a press conference at 2:30 p.m. ET Wednesday. Investors will be watching closely for any signals about future rate moves, as those could matter more than the hike itself.
What Retail Sales and Oil Mean for the Fed
August retail sales data from the Census Bureau arrives Wednesday morning at 8:30 a.m. ET. Consumer spending fell 0.6% from June to July without inflation adjustments, and another weak reading could raise concerns about household pressure.
Strong spending could give the Fed more reason to hike further. Either outcome makes Wednesday one of the more volatile sessions of the week.
Oil added another layer of complexity. Brent crude briefly topped $108 a barrel after a key Saudi pipeline carrying around 4 million barrels per day was shut down following drone attacks by Iran-backed Houthi militants.
The Strait of Hormuz situation is also worsening. A key diplomatic meeting between Gulf powers and Iran was postponed, dashing hopes for a resolution to the supply disruption. Before the conflict began, about a fifth of the world’s oil and liquefied natural gas passed through that waterway.
High energy prices feed into inflation, which complicates the Fed’s decisions. Energy stocks could benefit from elevated prices, while airlines and consumer businesses face rising costs.
AI Safety Fears Hit Markets
Separate from macro forces, AI stocks fell across Asia and Europe on Monday. The drop came after Anthropic CEO Dario Amodei published an essay over the weekend calling on AI companies to slow the pace of development.
Amodei cited growing concerns about misuse of advanced AI systems. Anthropic had revealed the week prior that actors had used its Claude models in weapons development and fraud.
I agree with Dario that we need to pace the frontier. This has been a primary topic of discussions we've had at OpenAI in recent weeks.
Committing to having independent evaluators with employee-like access is a great idea, and we will do the same. We'll have more to share soon. https://t.co/1YhhIybZX7
— Sam Altman (@sama) September 12, 2026
The comments drew support from OpenAI CEO Sam Altman and xAI boss Elon Musk. Altman also said OpenAI would not pursue a public offering this year due to safety concerns.
SoftBank dropped sharply in Japan. Taiwan Semiconductor Manufacturing Company, SK Hynix, and Samsung Electronics also fell.
Analysts at Deutsche Bank noted Amodei’s essay may shift how AI spending is allocated, toward safety and governance, rather than reduce total investment.
Beyond the Fed and AI, Salesforce hosts its Dreamforce conference starting Tuesday. Homebuilder Lennar reports earnings Wednesday, and Carnival reports Thursday, offering a read on consumer travel demand.
The broader market ended last week lower, with the Dow Jones down 1.6%. The S&P 500 remains up around 12% for the year.
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