US Economy: Weekly Commentary – March 2, 2026

US Market Review

U.S. Treasury yields fell. Investment-grade spreads widened. Stocks mostly declined. Oil and gold rose on geopolitical risks. The dollar weakened. Bitcoin dropped. Markets remain cautious.

U.S. Treasury yields declined over the course of last week. Globally, risk premiums on comparable investment-grade debt widened by nearly 4 basis points during the week, the largest weekly move since early November, and by approximately 8 basis points over the past month. At 82 basis points, however, spreads remain well below the 10-year average of 119 basis points.

U.S. equity markets closed the week broadly lower, with the exception of micro-cap stocks, which advanced 0.70%. Small-cap equities declined 1.20%, while large-cap stocks fell 0.45%. The “Magnificent 7” retreated 2%, led by Nvidia, which dropped more than 4%, followed by Apple, down 3.20%. On a sector basis, utilities outperformed, rising more than 3%, whereas financials underperformed, declining more than 2%.

The U.S. dollar depreciated by 0.28%. WTI crude oil gained 1.20%, driven by the breakdown of extended nuclear negotiations between the United States and Iran. The absence of an agreement heightened concerns over potential sanctions or military action that could disrupt Middle Eastern supply, particularly through the Strait of Hormuz, which accounts for approximately 20% of global oil flows, leading traders to price in elevated geopolitical risk and pushing prices to multi-month highs. Gold advanced 3.25%, while Bitcoin declined 3%.

US Market Views Synopsis

U.S. PPI rose 0.5% MoM, core PPI 0.8%, driven by services and trade margins. Consumer confidence slightly improved, but inflation concerns and weak housing demand persist.

The U.S. Producer Price Index (PPI) highlighted persistent inflation, rising 0.5% MoM, above the 0.3% forecast, bringing the annual rate to 2.9% YoY. Core PPI, excluding food and energy, jumped 0.8% MoM, the fastest monthly increase since March 2022, lifting the annual core rate to 3.6% YoY. Services and trade margins were key drivers, while final demand goods fell 0.3% MoM due to declines in energy and food. Gains were seen in core goods such as nonferrous metals and industrial equipment. Services increases included a 2.5% rise in trade margins and spikes in transportation and equipment wholesaling, partially offset by declines in software, guestroom rentals, and apparel. These figures suggest inflation pressures will persist, limiting the likelihood of interest rate cuts in the first half of the year. U.S. consumer confidence rose modestly to 91.2 in February, reflecting cautious optimism amid inflation concerns and uneven labour conditions. While discretionary spending edged up, housing demand remains subdued due to high mortgage rates and tight supply.

Inflation

January US PPI rose 0.5% MoM. Annual PPI is 2.9% YoY. Core PPI increased 0.8% MoM. Annual core is 3.6% YoY. Gains driven by services and trade margins.

January’s US Producer Price Index (PPI) report underscored persistent inflationary pressures, with headline PPI rising 0.5% MoM, above the 0.3% consensus, bringing the annual rate to 2.9% YoY, slightly below December’s 3.0% but exceeding expectations. Core PPI, which excludes food and energy, surged 0.8% MoM, well above the 0.3% forecast, marking its fastest monthly increase since March 2022 and lifting the annual rate to 3.6% YoY, the highest level since July 2025. The report highlighted divergent trends within goods and services: final demand goods declined 0.3% MoM, driven by energy (-2.7%) and food (-1.5%), while core goods excluding food and energy advanced 0.7% MoM, supported by gains in nonferrous metals, pork, and select industrial equipment. Final demand services led the overall increase, rising 0.8% MoM, propelled by a 2.5% jump in trade margins, a 1.0% increase in transportation and warehousing, and a 14.4% spike in professional and commercial equipment wholesaling, partially offset by declines in system software publishing, guestroom rentals, and apparel wholesaling.

We expect that the hotter-than-anticipated PPI print will sustain inflation pressures. Core prices, driven by services and trade margins, point to persistent underlying inflation, making a rate cut unlikely at least in the first half of the year.

Consumer sentiment

U.S. consumer confidence edged up to 91.2 in February. Cautious optimism coexists with inflation worries. Labour conditions remain patchy. Gold rises. Housing demand cools.

U.S. consumer sentiment showed modest improvement in February, with the Conference Board’s Consumer Confidence Index rising 2.2 points to 91.2, recovering only part of January’s decline. While the labour market differential edged up to 7.4 points, just over one in four Americans describe jobs as “plentiful,” and wage growth expectations remain muted, underscoring uneven underlying conditions. The Present Situation Index slipped 1.8 points to 120.0, reflecting balanced optimism on business conditions, while the Expectations Index rose 4.8 points to 72.0, signalling tentative forward-looking confidence still well below pre-election peaks. Households remain wary of persistent inflation and elevated living costs, a sentiment mirrored in financial markets where gold briefly surpassed $5,164 an ounce as investors hedge against potentially stickier price pressures. Demographic and political splits further highlight uneven economic experiences: confidence rose among younger consumers and Republican and Independent respondents but declined among older and Democratic households. Purchases of discretionary goods like used cars, furniture, and electronics ticked higher, yet housing demand continues to cool amid high mortgage rates and tight supply, suggesting that the American dream is increasingly a costly pursuit.

We expect that U.S. consumer confidence will remain cautious in the coming months. Inflation pressures and uneven labour conditions are likely to temper spending. Housing demand may stay subdued.