Making Sense
In Brief | The week ahead for markets and the economy
Federal Reserve Meeting | Retail Sales | Housing Starts | Jobless Claims
September 15, 2025
Blake: Last week, consumer price data for August showed that inflation is still running well above target, yet financial markets remain positioned for at least a 25-point rate cut at this week's Fed meeting, bond yields fell, and equity markets crossed new all-time highs.
Turning to the week ahead, the main event will be the Fed's interest rate decision on Wednesday afternoon, along with the quarterly summary of economic projections and then chair Powell's additional commentary in his post-meeting press conference. Markets are pretty much universally priced for a quarter-point rate cut at this meeting, but more attention will be focused squarely on the weak labor market than on above-target inflation. Some investors are actually positioned for a slight chance of a half-point move, although that looks unlikely.
A year ago, the Fed cut rates by a full percent from September to December, and the result was a much steeper yield curve. Yes, short rates came down, but remember, this was in the wake of significant market turmoil, and the consensus view at the time was that the economy was deteriorating rapidly. But fairly soon after, it became clear that the economy was doing alright and rates climbed higher, especially at longer durations. This served to us as a great reminder that the Fed might control short-term rates, but it does not control longer-term rates.
Moving on, there are some other points to watch this week. On Tuesday, we'll see retail sales data for August, which will be in particular focus after last week the Census Bureau announced that last year inflation-adjusted median income growth was actually pretty much zero.
And on Wednesday morning, we'll see housing starts data for the month of August, which forecasters expect will show yet another weak print as homebuilders continue to navigate an increasingly difficult environment.
And lastly, on Thursday markets will be watching to see if an elevated print and new jobless claims last week repeats itself, perhaps pointing to a trend of more layoffs. Or if that weekly series retreats, then that might give more of an all clear, at least for now in the labor market.
So things to watch this week: the Fed's policy rate setting meeting on Wednesday, retail sales data, housing starts and jobless claims.
Authors
Brent Ciliano CFA | SVP, Chief Investment Officer
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
Brent.Ciliano@FirstCitizens.com | 919-716-2650
Phillip Neuhart | SVP, Director of Market & Economic Research
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
Phillip.Neuhart@FirstCitizens.com | 919-716-2403
Blake Taylor | VP, Market & Economic Research Analyst
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
Blake.Taylor@FirstCitizens.com | 919-716-7964
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