Written Commentary
The Ghost in the Machine: Q3 2026 Macro Outlook
September 28, 2026
US, Canada and Japan holidays to dampen trading volumes, though geopolitical developments continue to raise risks; no major data to digest, with the focus on IMF and central bank speakers.
- Week Ahead: A busy run of US, China and UK data includes inflation, trade and GDP; IMF/World Bank meetings, the Fed Beige Book, OPEC and IEA oil market reports accompany the start of the US/global Q3 earnings season, with TSMC and US financials in focus.
EVENTS PREVIEW
A busy week gets off to a quiet start in terms of scheduled data, events and earnings, though the weekend geopolitical events offer plenty of food for thought, even given the need to drown out a lot of the political rhetoric, particularly the suggestion that Ukraine, rather than the conflicts in the Persian Gulf and Red Sea, is at fault for high energy prices and supply disruption.
Unsurprisingly, the brief initial setback in Brent crude prices at the open in Asia has been fully reversed as the reality of current flows of crude and products has reasserted itself.
It should be largely self-evident that a somewhat clearer picture of the various conflicts, above all how the US intends to engage with them or distance itself from them, will only emerge after the midterm elections.
The risk in the meantime is that the various Iran-aligned groups will look to exploit the ostensible hiatus in US military activity, above all to provoke responses while hoping to engender disenchantment with the Western world’s political leadership, and indeed with regional governments that are “allied” with the West.
Otherwise, central bank speakers, perhaps most notably the BoE’s Mann and the Cleveland Fed’s Hammack, are likely to be the only highlights on the schedule, as IMF Chief Georgieva’s comments on AI, jobs, and the energy price shock are digested.
While many will likely dismiss the emergent signs of liquidity tensions in the UAE banking system (see chart) as insignificant in terms of global financial market liquidity, the flow of capital to the Persian Gulf, above all to the UAE, in recent years, and the fact that local sovereign wealth funds (SWFs) hold an enormous volume of much-needed capital assets, suggest that the situation requires close monitoring.
RECAP: The Week Ahead Preview:
Geopolitical Risks Remain in Focus
Friday’s US lifting of specific sanctions to facilitate a deal on diesel exports with Russia, the resulting fallout for US-Ukraine diplomatic relations, and the weekend attacks on Saudi Arabia’s Riyadh Airport all serve to remind us that geopolitics remains an ever-present risk that markets should never dismiss.
The diesel export “deal” will do little to alleviate pressure on diesel prices and supplies, though it should allow the US to allocate more domestic production for domestic use rather than exports. The timing of the Houthi attacks on Riyadh Airport appears to be intended to disrupt this week’s WPC (World Petroleum Congress), and more are likely given the Future Investment Initiative Conference at the end of the month (26-29 October), with the US considering whether it will join the Saudi and official Yemeni government offensive against the Houthis. Attacks on shipping in the Persian Gulf also remain elevated.
Busy Week for Data, Earnings and International Institutions
Even without that surge in geopolitical risk, the new week is jam-packed with event risk, which, in addition to an array of major earnings releases and oil and mining behemoth Q3 production and trading updates, includes US, China and Indian inflation reports, China trade data, US retail sales and industrial production, UK monthly GDP and activity data, and final Eurozone CPI, as well as the annual IMF/World Bank meetings and accompanying World Economic Outlook and Financial Stability Review, monthly oil market reports from the IEA and OPEC, and the Fed’s Beige Book.
As noted on Friday, according to FactSet, S&P 500 Q3 earnings are expected to see year-on-year earnings growth of 29.6%. However, unusually, earnings estimates have been revised higher since the start of Q3, when the estimate was 26.7% (even if this was driven largely by Nvidia and Micron Technology). The point being that the five-year average for earnings growth estimates during a quarter has been a net downward revision of 2.2%, and the 10-year average a decline of 2.5%. The bar for positive surprises is therefore set rather high.
As ever, the earnings season kicks off with the usual run of large financials, with the focus as much on expected strength in equity trading revenues as on likely headwinds for M&A and bond trading revenues, alongside a close look at the impact of higher interest rates on retail banking revenues. However, the weak Q3 performance of the KBW Index suggests that these headwinds are already quite well discounted.
Monday also brings holidays in the US for Columbus Day, Thanksgiving in Canada and Health & Sports Day in Japan, likely making for a lower-volume start to the week, though weekend events may prompt some volatility.
Key Data Highlights
United States
- CPI is seen jumping 0.6% m/m for the headline measure, with the y/y rate rising 0.2 percentage points to 3.6%, while core CPI is expected to remain relatively contained at 0.2% m/m, edging the y/y rate up to 2.5%.
- PPI will also see energy drive a headline rise of 0.6% m/m for an unchanged annual rate of 5.4%, while the ex-food, energy and trade measure is forecast at 0.4% m/m and 4.8% y/y.
- After surging in August, retail sales are expected to slow to 0.3% m/m from 1.1%, while the core control group measure is also expected to slow to 0.3% m/m from 1.2%.
- Industrial production is forecast to post a solid 0.4% m/m gain after a flat reading in August, with manufacturing output at 0.3% m/m, exactly reversing August’s decline.
- The New York Fed and Philadelphia Fed manufacturing surveys are also due.
China
- Higher energy prices and rises in non-food prices ahead of the week-long public holidays are expected to see CPI rise to 1.0% y/y from 0.8%, and also drive a sharper increase in PPI to 4.5% y/y from 3.8%, though this is unlikely to signal an end to a longer-term disinflationary trend driven by weak consumer demand.
- AI and clean energy-related goods demand should sustain strong export growth of 25.4% y/y, with imports slowing modestly to 24.0% y/y from August’s 28.4%.
- Credit aggregates will see the usual end-of-quarter surge, but are still expected to show overall growth below 2025 levels due to weak consumer and private-sector business credit demand.
United Kingdom
- After strength in June (0.3% m/m) and July (0.4% m/m), monthly GDP is forecast to dip 0.1% m/m, with the Index of Services and Industrial Production also expected to fall by the same amount, as higher energy prices and long-term interest rates begin to weigh on demand.
- BRC retail sales are seen at 0.7% y/y, modestly higher than August, though primarily as a result of benign base effects.
Energy, Commodities and Industry Events
Outside of the WPC in Saudi Arabia, the week also features African Energy Week in Cape Town and Russian Energy Week in Moscow. The FT Metals and Mining Summit in London is also taking place, while the end of the week sees the SIAL Paris International Food Show and the Chicago Fed’s Midwest Agriculture Conference.
Corporate Earnings Calendar
There are 25 S&P 500 companies reporting this week, with worldwide corporate earnings highlights, as compiled by Bloomberg News, likely to include:
ASML Holding, Bank of America, Bank of New York Mellon, BlackRock, Charles Schwab, Citigroup, Citizens Financial, Fastenal, GO Inc., Goldman Sachs, Hangzhou Hikvision Digital Technology, HCL Technologies, Interactive Brokers, Investor, Johnson & Johnson, JPMorgan Chase, LM Ericsson, M&T Bank, Marsh & McLennan, Morgan Stanley, Nanya Technology, Nestlé India, Nordea Bank, PNC Financial Services, Progressive, Prologis, State Street, TSMC (Taiwan Semiconductor Manufacturing Company), Travelers, Truist Financial, UnitedHealth, US Bancorp and Wells Fargo.
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This material is provided for information purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any financial instrument. The views expressed reflect market conditions and publicly available information as of the date of writing and may change without notice. No representation or warranty is made as to the accuracy or completeness of the information. Past performance is not indicative of future results. Readers should consider their own circumstances and, where appropriate, seek independent financial advice.
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