Macro The February Core PCE rose 0.37% month-over-month, pushing the annualized rate to 2.79%. The increase was driven by price pressures in goods and non-housing services, even as shelter inflation continued to moderate. Earlier in March, a softer CPI report raised hopes that inflation might ease without aggressive Fed tightening. However, those hopes were dented by the PCE release, which failed to confirm a consistent disinflation trend. Further compounding concerns,…

Macro The Federal Reserve has kept interest rates steady against a backdrop of an increasingly uncertain economic outlook. While this decision was expected, it also provided relief to markets that the Fed did not rush to conclusions. Markets responded positively to the Fed’s stance, reaffirming the view that tariff-related inflation is likely transitory—reassuring that further aggressive tightening is not imminent. The market has shifted from inflation concerns to rising recession…

Macro Inflation is moderating, yet consumer anxiety persists, raising long-term inflation expectations. While tariffs typically have negative implications for both growth and inflation, analysts are currently placing greater emphasis on potential impacts on economic growth. Increased concern about an economic slowdown is prompting analysts to raise their recession forecasts. The Federal debt to GDP ratio is close to 1:1, and the US is running a deficit of 7% of GDP,…

Macro Growing concerns about economic growth have increased the frequency with which economists discuss the possibility of a recession. Recessions are not typically triggered by a single catastrophic event; rather, they are often the culmination of a period during which the economy becomes increasingly fragile. This fragility makes the economy vulnerable to potential shocks that can significantly reinforce downward pressure on growth and lead to a recession. Back in 2022,…

Macro U.S. employers are projected to add 160,000 jobs in February, with the unemployment rate at 4%. This represents a modest improvement over the 143,000 jobs added in January amid federal government layoffs and a slowdown in consumer spending. The upcoming labor market report will update Federal Reserve officials on current job market momentum. Core PCE for January came at the lowest annual increase in 4 years. Fed Chair Powell’s…

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…