Following the Fed's central bank meeting, sobriety is likely to have returned at the latest by now. Optimists and skeptics are currently handing the baton back and forth. After the Fed has signaled its clear stance, a sober look at economic data is likely to count again. At the same time, the drop in oil prices is acting like a shock absorber for the markets. As expected, the focus of the past few trading days was in particular on the US central bank meeting, which raised interest rates for the first time since 2023.
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ZEW Index fails to meet expectations – US retail sales stronger than thought
The ZEW economic sentiment index published on Tuesday came in at 34.7 points, significantly below expectations (37 points), compared to 34.2 points in August.
As data published on Wednesday showed, US retail sales increased by 1.2 percent in August compared to July, which was stronger than expected (0.8 percent), after having declined by 0.5 percent in the previous month. This development could indicate a certain resilience of the US economy. In this context, investors might hope that the economy will be able to handle interest rate hikes. However, it should be noted that part of the increase in sales resulted from higher prices, particularly for gasoline.
Interest rate band in the US is now at 3.75 to 4.00 percent – Further rate hike conceivable by the end of 2026
As expected, the US central bank turned the interest rate screws upward by a quarter of a percentage point on Wednesday evening. The target range for the federal funds rate is thus between 3.75 and 4.00 percent. In its outlook, the Fed also signaled that monetary policy could be tightened once more by the end of 2026.
German producer prices fuel inflation concerns at home
German producer prices were already published this morning, and they are unlikely to put an end to inflation concerns. In August, German manufacturers raised their prices at the fastest rate in over three years. According to the Federal Statistical Office, prices increased by an average of 4.6 percent compared to the same month last year.
In the new trading week, a planned meeting between US President Donald Trump and State President Xi Jinping is likely to be in particular focus. Trade issues are expected to be one of the central topics of discussion.
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