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…

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…