The University of Michigan’s consumer sentiment index fell to 47.8 in early September 2026, down for a second consecutive month and well below market expectations of 51.0, according to the preliminary estimate. It was the weakest reading since May’s record low. Year-ahead expectations for personal finances and business conditions also deteriorated, as consumers anticipate greater pressure on household budgets amid rising fuel prices and trade tensions. Five-year business expectations were broadly stable but remained well below their historical average, suggesting consumers do not expect current risks to significantly worsen the longer-term outlook. Overall sentiment is now 16% below February levels, before the start of the Iran conflict, and 13% below a year ago. Year-ahead inflation expectations jumped to 4.6%, the highest since June, while five-year expectations edged up to 3.4% after holding at 3.3% for three consecutive months.

Crude oil paused its rally to settle around $100 a barrel on Friday after Iranian state media said Tehran would meet Gulf states in Oman to discuss the Strait of Hormuz. Gulf Cooperation Council diplomats are expected to meet their Iranian counterpart on Monday to discuss a possible temporary arrangement for managing shipping through the strait. Adding to downward pressure, the EIA raised its 2027 US crude production forecast to 14.3 million barrels a day, while the IEA sharply cut its global oil demand outlook, forecasting a 2.5 million-barrel-a-day contraction in 2026. Meanwhile, China is on track to import roughly the same volume of crude in September as in August, with purchases recovering from June’s decade-low. Saudi Arabia shut its East-West crude pipeline as a precaution after multiple attacks, while Iran-backed Houthis reportedly advanced to Yemen’s Perim Island. Oil surged 9.7% on the week.

US stock indices closed higher on Friday, halting four sessions of losses as oil prices and Treasury yields paused their surge. The S&P 500 gained 0.9%, the Dow added 509 points, and the Nasdaq 100 rose 0.9%. Long-dated Treasury yields eased from multi-year highs as fuel prices refrained from extending this week’s rally, which was fueled by a wave of strikes between the US and Iran in the Persian Gulf. High energy prices were expected to worsen an already elevated inflation outlook, with headline inflation at 3.4% in August, reinforcing bets that the Fed will raise rates on Wednesday. Credit-sensitive sectors gained as the oil rally paused, with Alphabet up 1.5% and Amazon adding 1.9%, while JPMorgan rose 0.8%. Oracle erased earlier gains, down 1.8% despite reporting strong results. Chipmakers gained, with AMD up 2.5% and Intel up 2.6%. Dell surged 11.9% to all-time high on RBC Outperform initiation. On the week, the S&P 500 lost 0.6%, the Nasdaq fell 0.7%, and the Dow shed 426 points.

The potential for constructive dialogue regarding tanker flows between the GCC and Iran next week halted the surge in oil and gas prices at a time that financial markets fret over the inflationary outlook. Outcomes will impact global borrowing costs as the Federal Reserve sets interest rates. For economic data, the US will release retail sales, trade terms, and industrial production. Monetary policy announcements are also taking the spotlight in the UK and Japan. A busy week of data in the UK features its inflation, wages, and retail sales, while Germany publish its ZEW confidence indicator and the Euro Area will post its goods trade and industrial production. A series of key data for China includes industrial production, retail sales, unemployment, housing prices, and credit aggregates. Lastly, BRICS nations are due to meet.

Brazil’s annual inflation rate eased to 4.22% in August 2026 from 4.44% in July, slightly below forecasts of 4.27% and moving further within the central bank’s target range of 1.50%-4.50%. Price growth slowed for housing (4.90% vs. 5.93%), clothing (3.25% vs. 3.87%), transport (3.04% vs. 3.64%), health and personal care (5.84% vs. 6.16%), and education (5.98% vs. 6.27%). The moderation in transport costs was partly driven by easing fuels and energy inflation, which fell to 4.60% from 7.60%. Although oil prices surged internationally amid tensions in the Middle East, Petrobras refrained from immediately passing on the external volatility to its refineries, resulting in a cumulative gap relative to international market prices. On a monthly basis, consumer prices declined 0.32%, following a marginal 0.1% increase in July. CPI has risen 3.11% year to date.

The Bank of Russia maintained its policy rate unchanged at 14% at its September 2026 decision, aligned with market expectations, after ten consecutive interest rate cuts since departing from the record-high rate of 21% in May of last year. The hold was warranted as the central bank stated that underlying inflation has surged in the third quarter, but cited the increase as the result of one-off, exogenous factors, noting that disinflation is due to resume. The latest data indicated that seasonally adjusted price growth was at an annualized 11.6%, as hampered refining capacity due to Ukrainian attacks triggered a surge in energy prices. In turn, the bank note that consumption is slowing at a moderate pace despite remaining elevated. Meanwhile, the labor market remained tight and unemployment has held near record lows, with working-aged men migrating outwards to escape military conscription of the war in Ukraine.