Weekly Macro Report, March 1 2026

1. Economic Growth & Outlook

The S&P 500 climbed 14.87% year-over-year through February 2026, signaling robust market confidence. US GDP decelerated sharply to 1.4% annualized growth in Q4 2025 from 4.4% in Q3, driven by weaker consumer spending and government outlays. The Federal Reserve maintained its policy rate at 3.75% in January 2026, pausing after three consecutive cuts, as persistent inflation risks offset softening growth momentum and temper near-term expansion prospects.

2. Labor Market

U.S. nonfarm payrolls rose 130,000 in January 2026, beating estimates but following 2025's benchmark revision to just 181,000 total jobs added—the slowest pace since 2003 outside recession. Unemployment edged down to 4.3% with labor force participation at 62.5%, while job openings per unemployed fell below 1.0 in a low-hire, low-fire environment. These stabilizing signals reduce pressure on the Fed to cut rates from current levels.

3. Interest Rates

As of February 26, 2026, the 10-year Treasury yield declined to 4.02%, marking its lowest level in three months amid safe-haven demand. Investment-grade corporate yields stood at 4.73% on February 25, maintaining attractive returns for fixed-income investors despite tight valuations. These declines benefit borrowers while compressing yields available to savers and bond holders.

4. Yield Spreads

As of February 27, 2026, the US Treasury curve shows a compressed 10-year-3-month spread of 0.30%, indicating moderate growth expectations amid economic uncertainty. The 10-Year TIPS real yield of 1.74% remains historically attractive, supporting inflation-protected investments. Safe-haven demand for Treasuries reflects ongoing policy uncertainty surrounding tariffs and geopolitical tensions.

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5. Inflation Dynamics

As of January 2026, U.S. headline CPI rose 2.4% annually, below the OECD's 3.7% December average, while core CPI hit 2.5%, with shelter at 3% as the largest driver and energy down 0.1%. The Producer Price Index, which often leads CPI, advanced 2.9% year-over-year. As of late February 2026, the 10-year breakeven rate, signifying expected inflation priced into TIPS bonds, stood at 2.3%.

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6. Money Supply

M2 money supply grew 4.3% year-over-year through January 2026, exceeding the 2.4% CPI inflation over the prior 12 months. This pace outstrips 2.1% real GDP growth, indicating inflationary liquidity. Drivers include rising bank credit and Fed policy support.

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7. Consumer Sentiment

Michigan Current Conditions held at 56.6 in February 2026, matching Expectations at 56.6 after a 0.4-point dip from January's 57.0. Their spread narrowed to zero from +1.6, signaling aligned household views on present and future. The US 10Y-3M yield curve steepened to +45 bp in February, mirroring this neutral consumer outlook on growth ahead.

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8. Housing Market

As of late February 2026, housing inventory rose 10% year-over-year in January while home prices remained nearly flat at 0-1.9% growth, yet existing home sales dropped 8.4% month-over-month to 3.91 million annualized units in January. Mortgage rates hovered near 6.3%, creating a paradox where rising supply and stable prices have failed to unlock demand, leaving the market in precarious balance between buyer and seller advantage.

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9. Stock Market Sectors

As of late February 2026, US sectors show rotation from tech. Energy leads YTD with energy ETFs up 23%, driven by oil price surges and power demand for AI data centers. Materials and Consumer Staples follow as top performers amid risk-off moves. Technology lags at -2%, weighed by Nvidia and AI stock consolidation, while Financials dip 0.5% on stretched valuations. This gap signals capital shifting to real-economy plays.

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10. Stock Market Valuation

US equity valuations stand at historic highs as of February 27, 2026. S&P 500 PE is 29.2, Shiller PE is 40.0. This yields a 45% premium to global peers like Europe's STOXX 600 at 14.5 PE. US mega-cap tech dominance and 14% projected 2026 earnings growth drive the gap.

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11. Stock Market Internals

As of February 26, 2026, the VIX closed at 18.63, down 11% from 21.01 on February 23. March VIX futures rose 4.45% to 20.64 on February 27 amid equity declines of 0.43-1.05%. Elevated near-term volatility expectations signal persistent market uncertainty despite the spot pullback.

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12. Global Equity Performance

Global equities demonstrated divergent momentum through early 2026. The S&P 500 gained 1.4% in January, while non-US stocks significantly outperformed, with emerging markets up 8% and Japan rising 6.2% for the month. This rotation away from US mega-cap technology reflects broadening earnings growth expectations, with S&P 500 earnings projected to expand 14% in 2026 and emerging markets earnings matching US growth for the first time in over a decade.

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13. Commodities

Gold hit $5,248 per ounce on February 28, up 7.6% month-to-date amid Israel-Iran missile strikes escalating geopolitical risks. Silver reached $92.60 per ounce, gaining 4.8% in February on supply constraints from China's January export policy changes and surging industrial demand. Platinum peaked at $2,821 per ounce on January 26, driven by macroeconomic support and supply-demand imbalances.

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14. Crypto Market

Bitcoin trades at $118,838 as of February 23, 2026, up 1.21% over the past week amid whale accumulation and CLARITY Act anticipation by March 1. Ethereum holds near $1,860, underperforming Bitcoin with an ETH/BTC ratio of 0.0292, reflecting broader market consolidation after $459 million in liquidations. Institutional positioning signals potential stabilization above key $64,000 BTC support.

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15. Currencies

The US dollar strengthened in late February 2026, with EUR/USD falling to 1.0534 from 1.1306 amid US GDP doubling EU/UK levels and inflation at 2.4%, delaying Fed cuts. This weakened euro by 0.5%, yen to 149.57, pound to 1.2371, Canadian dollar to 1.3014, Swiss franc to 0.9550, and New Zealand dollar to 0.6361 per USD, while yuan hit 7.08. Stronger USD draws capital inflows, curbs imported inflation globally, and pressures trading partners' monetary easing.

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16. Debt Levels

As of February 2026, U.S. federal debt stands at 123% of GDP, with interest payments accelerating to 4% of GDP by 2031. The federal deficit is projected at 5.8% of GDP in 2026, rising to 6.7% by 2036. The critical risk is debt service crowding out productive spending: net interest will consume nearly 14% of federal revenues in 2026, forcing policymakers to choose between fiscal consolidation and reduced investment, while investors face sustained pressure on Treasury yields and potential fiscal dominance concerns.

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17. Economic Calendar

In the month ahead, the March 11 CPI release will gauge inflation trends; a print over 2.5% may lead the Fed to hold rates steady. The March 6 Employment Situation report, including unemployment rate, will signal labor strength ahead of the March 17-18 FOMC meeting. March 13 GDP and JOLTS data will further shape policy decisions on the federal funds rate.

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An error appeared while loading the data. Maybe there is a technical problem with the data source. Please let me know if this happens regularly @silvan_frank.