Macro Although inflation has started to cool, consumers’ long-term inflation expectations have risen to a 30-year high. This unexpected increase is driven by heightened inflation concerns and rising prices for specific goods that significantly affect consumers. Surprisingly, despite elevated inflation expectations, yields at the long end of the yield curve have moved lower, reflecting market caution. Consumer fears about inflation are intensifying, signaling that the U.S. economy is still far…

Macro This week was marked by high-profile events, including pivotal elections in Germany, Powell’s congressional testimony, and Trump’s tariffs, which further contributed to the overall sense of uncertainty in global markets. Recent U.S. retail sales data pushed Treasury yields lower, though the broader outlook remains uncertain amid persistently sticky inflation. Historically, the Federal Reserve pauses when economic indicators are murky, and current conditions suggest a similar approach. Although January’s inflation…

Macro January payrolls showed a slowdown in job growth, a slight wage increase of 0.5% and an increase in the participation rate. Payrolls rose by 143K vs the expected 175K. Additionally, revisions to recent employment data showed that job gains were higher than initially reported: November’s increase was adjusted from 212,000 to 261,000 and December’s from 256,000 to 307,000, resulting in an extra 100,000 jobs over the two months. The…

Macro The Federal Open Market Committee (FOMC) maintained the federal funds rate between 4.25% and 4.5%, noting that inflation continues to be “somewhat elevated”. The Federal Reserve’s statement was somewhat hawkish, revealing cautious optimism about achieving inflation and employment targets. Interestingly, J. Powell omitted previous language indicating progress toward the 2% target. By removing the positive remark about inflation progress while emphasizing solid employment, investors interpreted this change as a…

Macro This year’s World Economic Forum in Davos, themed “Collaboration for the Intelligent Age,” convened amid rising geopolitical tensions and a rapid push to lead in artificial intelligence. Participants highlighted AI’s immense promise to benefit society as a whole but also warned that weak oversight could deepen existing inequalities. Calls for responsible innovation and inclusive frameworks resonated throughout the event, yet much of the spotlight fell on President Trump’s video…

The Core CPI declined for the first time in six months, shifting expectations for rate cuts, pushing Treasury yields lower, and triggering a rally in risk assets. The December results showed signs of inflation moderation. According to the Bureau of Labor Statistics, the CPI rose 0.4% Month over Month and 2.9% year over year. The core CPI (which excludes food and energy) increased 0.2% Month over Month and eased to…