This week brings us some key puzzle pieces for the inflation picture, with February’s CPI and PPI reports dropping Wednesday and Thursday. On Friday, we’ll get the University of Michigan’s Inflation Expectations data, the same series that spiked to 4.3% in January. Was that a fluke or a real trend? We’ll soon find out.

The real headliner this week? The NFIB Small Business report on Tuesday. Quick reminder: the NFIB releases its employment data early in the month. Here’s a stat from that release that should make you sit up - last Thursday’s data showed small businesses struggling with labor costs at near-record levels. In fact, since 1974, this number has only been higher once in 614 months. Big week ahead - stay tuned!

The Macro Week In Review

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The Macro Week Ahead

A Wild Week For Wall Street:

Last week was a financial rollercoaster, with uncertainty around fiscal and monetary policy sending markets into a tailspin. Conflicting news on U.S. tariffs, mixed signals from the Treasury Secretary and Fed Chair, and shifting rate-cut expectations left investors scrambling. The S&P 500 plunged 3%, with cyclical sectors (Financials, Discretionary, and Energy) taking the biggest hits. Heavyweights like Nvidia (-9.8%), J.P. Morgan (-8.5%), Amazon (-6.1%), and Costco (-8%) all tumbled. Gold (GLD) offered some relief (+2%), but bonds failed to cushion the blow as both 2-year and 10-year Treasury yields climbed.

Just three weeks ago, markets priced in only a 12% chance of a May rate cut. That spiked to nearly 60% last week - only for Powell to cool expectations with his Friday statement that the Fed is “not in a hurry” and waiting for “greater clarity.” Rate-cut odds fell back to 40%. Meanwhile, Scott Bessent warned that government-driven market support is fading, setting the stage for a possible “detox period.” Short-term traders, brace yourselves. Hawkish policy isn’t your friend.

What The Data Tells Us:

The latest “growth scare” narrative is showing up in slowing economic indicators. Payrolls, personal income, and Bloomberg’s Surprise Index are flashing weaker signals, with Retail & Wholesale also taking a hit. But at this stage in the cycle, that’s expected.

Friday’s jobs report showed Nonfarm Payrolls at +151K (vs. +160K expected) and unemployment creeping up to 4.1% from 4.0%. Economists love to fixate on these coincident indicators, but it’s the forward-looking data that really drives market trends.

Leading Indicators Remain Solid:
Global U.S. Manufacturing PMI: 52.7 (Feb)
ISM Manufacturing Index: 50.3
ISM Services Index: 53.5

These point to a stable Q1. The NFIB jobs report also confirms labor market tightness, suggesting recession risks are still limited. That said, some recent economic strength might be fueled by businesses stockpiling ahead of tariffs. Even so, the path of interest rate trends suggest growth still has room to run.

Inflation Expectations & The Fed’s Dilemma:

Keep an eye on the NY Fed’s 1-Year Inflation Expectations - often overlooked, but crucial right now given the market’s rate cut fixation. Last month’s 3.0% reading was above target and near its potential cyclical floor (2.8% in Oct 2024). Meanwhile, Friday’s University of Michigan Inflation Expectations report could stir the pot again. January’s 1-Year inflation reading shot up to 4.3% from 2.6% late last year. A huge jump, though it’s often skewed by consumer sentiment and grocery price shocks.

NFIB Small Business Optimism & CPI/PPI Reports:

We’re up early Tuesday (6:00 am EST) for the NFIB Small Business Optimism Index, a key indicator for Small Cap earnings. This index hit a 12-year low (88) in March 2023 before rebounding to 105 in December. Expect some normalization in upcoming readings.

But the real fireworks come Wednesday and Thursday with CPI and PPI for February. These are critical ahead of the March 19th Fed meeting.

Forecasts Call For:
Headline CPI: 2.9% (vs. 3.0% prior)
Core CPI: ~3.2%

Don’t be surprised if inflation runs hotter. Core PPI, a leading indicator for CPI, suggests an upside surprise is possible. Plus, the ISM Manufacturing & Services Prices Index averaged a red-hot 62.5 in February, up 5 points month-over-month. This might be businesses hiking prices ahead of tariffs - meaning it could be temporary. Or not.

Buckle up. It’s going to be a data-packed week!

Macro Job Board

Global Macro Cross Asset Investment Strategist @ StoneX Group (Miami)

Seeking a highly motivated Cross-Asset Macro Strategist to join our fast-paced and dynamic team. This is a sell-side research role designed to support the Chief Market Strategist (CMS) in delivering cutting-edge research and actionable investment strategy across multiple asset classes.

Global Macro Portfolio Manager @ GIC (New York)

Looking for a highly qualified candidate to join our Global Macro (GM) team as Assistant Vice President / Vice President, Portfolio Manager, within the Multi-Asset Absolute Return Portfolio (MAARS). Responsible for portfolio management and return generation, with a focus on macro equity across country, sector, style, and thematic investments.

Global Macro Research Analyst @ Goldman Sachs (Washington, DC)

This candidate will closely monitor political and policy developments 
and assist economists to publish timely and innovative research on macroeconomic, political, and policy developments and their economic impact. They will also work on economic research projects and publications.

What We Read This Weekend

1. Treasury Secretary Forecasts ‘Detox Period’ For US Economy

2. How Trump’s ‘51st State’ Canada Talk Came To Be Seen As Deadly Serious

3. Donald Trump’s Economic Delusions Are Already Hurting America

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