Weekly Macro Report, March 8 2026

1. Economic Growth & Outlook

The S&P 500 stands at 6,857.40 as of March 3, 2026, up 16.7% year-over-year from January 2025. Real GDP expanded 2.2% in Q4 2025, with Goldman Sachs projecting 2.5% growth for full-year 2026 versus consensus estimates of 2.1%. The Federal Funds Effective Rate remains at 3.64% through early March, down 69 basis points from 4.33% last year. Current positioning suggests resilient equity momentum paired with moderate growth momentum and accommodative monetary policy supporting near-term economic resilience.

2. Labor Market

The U.S. labor market deteriorated sharply in February 2026, with nonfarm payrolls declining 92,000 jobs against expectations for 59,000 gains, while the unemployment rate rose to 4.4%. Significant downward revisions to prior months—December's figure swung from plus 48,000 to minus 17,000 jobs—signal underlying weakness that contradicts early-year optimism. This momentum loss and elevated joblessness ahead of the March 17-18 Fed meeting will likely pressure policymakers to reconsider their patient stance on rate cuts, with June appearing as the earliest viable timing unless labor market deterioration accelerates further.

3. Interest Rates

As of March 5, 2026, the 3-year Treasury yield rose to 3.59% from 3.39% on February 27, signaling higher funding costs for government debt that pressure household budgets. Aaa corporate yields climbed to 5.36% on March 5 from 5.24% late February, raising business expansion costs while boosting bond investor returns. Investment-grade corporate yields held at 4.86% on March 5, maintaining steady borrowing hurdles for firms.

4. Yield Spreads

As of March 6, 2026, bond markets reflect solid growth expectations. The US Yield Curve steepens with 3-month yields at 3.70% and 10-year yields at 4.15%, while 10-Year TIPS Real Yields near 1.79% support sustained expansion. No credit spreads data available.

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5. Inflation Dynamics

As of January 2026, U.S. headline CPI rose 2.4% annually, below the 4.0% OECD average, while core CPI hit 2.5%, with shelter at 3.0% as the largest driver. The Producer Price Index, which often leads CPI, advanced 2.9% year-over-year in January. As of late February 2026, the 10-year breakeven rate, which signifies expected inflation priced into TIPS bonds, stood at 2.3%, signaling steady long-term expectations.

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6. Money Supply

M2 money supply jumped 4.3% year-over-year in January 2026 to a record 22.44 trillion dollars, while CPI inflation rose 2.4% over the same period. This 180 basis point spread indicates liquidity is expanding well above price growth, creating inflationary conditions. The Fed's shift to adding 40 billion dollars monthly to reserves after ending quantitative tightening through 2025 is the primary driver of accelerating money growth.

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7. Consumer Sentiment

Consumer sentiment remains deeply pessimistic as of late February 2026, with the University of Michigan index stalled at 56.6—roughly 13% below year-ago levels and 21% below January 2025. The current conditions component matched expectations at 56.6, eliminating the typical negative spread, signaling households perceive no meaningful economic improvement from prior months. Meanwhile, the 10-year-3-month Treasury spread stood at 0.46% as of March 6, well below the 1.10% long-term average, reflecting bond markets' muted growth outlook and persistent yield curve flattening despite modest near-term upticks.

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8. Housing Market

US home prices rose 1.8% year-over-year through Q4 2025, with forecasts at 0% growth in 2026. Existing sales held near 4 million units in 2025, edging higher into early 2026 as inventory climbed 8% year-over-year to 915k active listings by end-February. Mortgage rates fell to 6.04%, a three-year low. Rising supply balances demand, but high prices keep affordability out of reach for most.

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9. Stock Market Sectors

As of March 4, 2026, Industrial, Energy, and Consumer Defensive stocks lead the market rotation, with Industrials up 16% year-to-date and Caterpillar driving 1.9 percentage points of sector gains through AI infrastructure demand. Technology and Communication Services lag amid software selloffs, with software stocks down 30-40% this year as AI displacement concerns mount. Conversely, Utilities and Real Estate remain underperform-rated despite rising data center energy tailwinds, constrained by valuation premiums and structural headwinds.

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10. Stock Market Valuation

US equity valuations stand elevated as of March 6, 2026. S&P 500 PE sits at 27.48, above its 5-year average of 22.86. This yields a 35% premium to global peers like Europe's STOXX 600 at 15.2 PE. US mega-cap tech dominance, driven by 25% earnings growth, sustains the gap.

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11. Stock Market Internals

As of March 6, 2026, the VIX spiked to 27.10, up 36.84% from its 1-month low of 18.77 on February 9. VIX futures settled at 26.97, reflecting heightened near-term volatility expectations amid Friday's broad equity selloff. This surge signals a shift to elevated investor caution and potential near-term downside risk in stocks.

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12. Global Equity Performance

Global equities rotated toward emerging markets in 2025, with MSCI China up 33.6% for the year through Dec 31, significantly outpacing the S&P 500's 17.3% gain. Germany's MSCI index rose 36.3% amid fiscal stimulus, while the UK's FTSE 100 hit 10,000 in January 2026. This shift from US dominance signals broadening momentum into early 2026.

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13. Commodities

Gold declined 4.17% to $5,099.40 per ounce on March 3, 2026, and retreated further to $5,092.25 by March 5 as a severe liquidation wave erased safe-haven gains accumulated over the prior week. Silver fell 7.31% to $82.78 on March 3, driven by breached technical support levels and margin calls, though geopolitical de-escalation in Middle Eastern tensions also prompted unwinding of the fear premium that had sustained prices.

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14. Crypto Market

Bitcoin traded near $73,400 on March 4, 2026, while Ethereum remained depressed at $2,161, down 60% from its August 2025 peak of $4,953. The divergence reflects institutional resilience in Bitcoin through $458 million in spot ETF inflows, contrasting sharply with Ethereum's six-month bearish streak requiring a breakout above $2,160-$2,180 to signal recovery.

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15. Currencies

The US dollar strengthened in the week ending February 27, with EUR/USD falling to 1.1818 from 1.1881 and USD/JPY rising to 156.05 from 154.32, as Fed rates held at 3.75%-4.00%. This drew capital inflows, pressuring the Pound to 0.742 GBP/USD, Yen to 156.05, Canadian Dollar to 1.3632, and Swiss Franc to 0.7686, while Australian Dollar firmed to 0.7121 on RBA's 25bp hike to 3.85%. Stronger USD curbs import inflation but tightens global trade financing ahead of NPC on March 5.

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16. Debt Levels

As of Q4 2025, U.S. federal debt stands at 122.3% of GDP, with private debt at 142% as of end-2024. Federal debt held by the public reaches 101% of GDP in 2026, exceeding post-World War II records by 2030. The critical risk is net interest costs surging to 4.6% of GDP by 2036, consuming 19% of federal spending. This trajectory constrains fiscal flexibility for policymakers and forces investors to reassess long-term sovereign credit risk and bond valuations amid structural deficits averaging 6.1% of GDP through 2036.

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17. Economic Calendar

In the month ahead, the March 18 FOMC meeting will be the dominant event, with the policy statement at 2:00 p.m. ET and Chair Powell's press conference at 2:30 p.m. ET shaping rate expectations. Key inflation data on March 11 (CPI) and March 18 (PPI) will inform whether the Fed maintains rates steady or signals future cuts. The March 6 employment report and March 13 JOLTS job openings will demonstrate labor market strength, critical factors as the Fed waits for more data before adjusting the current 3.50-3.75% federal funds target range.

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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.