Macro View - February 27, 2026 (EOD)

 ## Macro Summary Markets closed lower across the board on Friday, extending a February slump driven by a mix of persistent inflation concerns, geopolitical tensions, and renewed AI-related anxieties. The S&P 500 fell 0.73% to $684.29, the Dow Jones dropped 1.25% to $488.68, the Nasdaq 100 declined 0.60% to $605.56, and the Russell 2000 was the weakest, down 2.12% to $260.36. The broad-based selloff reflected investor caution amid a more hawkish inflation outlook and uncertainty over the pace of economic growth. Inflation data released earlier in the week showed a sharper-than-expected rise in producer prices, fueling concerns that inflation pressures remain sticky despite earlier signs of easing. This backdrop weighed on risk assets, particularly growth and tech stocks, which are sensitive to interest rate expectations. Additionally, geopolitical tensions involving the U.S. and Iran added a risk-off element, pushing safe havens higher and boosting commodity prices, especially oil and precious metals. The market mood was further unsettled by a wave of AI-related job cuts and margin pressure in some tech-related sectors, which spurred fears of a broader tech slowdown despite ongoing enthusiasm for AI innovation. ## Economic Data Reaction - **Initial Jobless Claims:** 212K actual vs. 215K expected - The slightly better-than-expected labor market data provided some support to the economy’s resilience narrative but was overshadowed by inflation concerns. - **EIA Natural Gas Change:** -52B actual vs. -50B expected - A smaller-than-previous draw in natural gas inventories helped underpin commodity prices. - **Kansas City Fed Composite Index:** 5 actual vs. 0 previous - An improvement in regional manufacturing sentiment was noted but did little to offset broader market worries. - **PPI Final Demand (Jan):** 0.5% actual vs. 0.3% expected - The hotter-than-expected inflation reading intensified concerns about persistent price pressures, contributing to the market’s risk-off tone. ## Fed & Central Banks No new Fed commentary was released today, but the market continues to price in a cautious Fed stance given the recent inflation data. The stronger-than-expected PPI reading reinforces expectations that the Fed may maintain a restrictive policy stance longer than previously anticipated. Meanwhile, global central banks remain watchful of inflation dynamics and geopolitical risks, with the Bank of England and ECB also signaling vigilance amid mixed inflation signals in Europe. ## Rates & Bonds - 20+ Year Treasury (TLT) price rose to $90.86 (+0.65%), reflecting demand for long-duration safe assets. - 7-10 Year Treasury (IEF) price increased to $98.09 (+0.50%), indicating flattening yield curve dynamics. - 1-3 Year Treasury (SHY) price modestly up to $83.18 (+0.14%), showing some short-term rate stability. The bond market’s rally, particularly in longer maturities, suggests investors are seeking safety amid equity volatility and inflation uncertainty. The flattening yield curve continues to signal concerns about future economic growth and potential recession risks. ## Currency & Dollar The U.S. dollar index (UUP) edged slightly lower by 0.07% to $27.08, despite a generally risk-off environment. Dollar weakness was modest and did not provide significant relief to global markets. The dollar’s relative stability amid geopolitical tensions and inflation worries reflects its ongoing role as a safe haven, although some emerging market currencies showed resilience, supported by easing trade tensions and central bank interventions. ## Commodities Wrap - Oil (USO) closed at $81.97, up 2.76%, hitting seven-month highs amid stalled U.S.-Iran nuclear talks and heightened Middle East tensions, which raised supply disruption concerns. - Gold (GLD) rose to $485.52, up 1.68%, benefiting from safe-haven demand amid inflation fears and geopolitical uncertainty. - Silver (SLV) surged 5.83% to $85.14, outpacing gold gains, reflecting speculative interest and inflation hedging. - Natural Gas (UNG) increased 1.23% to $11.52, supported by a smaller-than-expected inventory draw and seasonal demand. The commodity rally underscores the market’s risk-off sentiment and inflation hedging behavior, with energy and precious metals leading the gains. ## Global Markets Close - Europe closed mixed but mostly lower, weighed down by inflation concerns and earnings misses in key sectors. European stocks are on track for their eighth straight monthly gain, but the pace slowed as investors digested mixed corporate earnings and inflation data. - Asia is set for a cautious open tonight, with markets likely to remain sensitive to U.S. inflation data, geopolitical developments, and ongoing concerns about China’s economic growth and currency stability. ## Tomorrow's Macro Focus Market participants will focus on the U.S. Producer Price Index (PPI) final demand report for January, expected at 0.3%, following today’s hotter-than-expected preliminary data. This will be a key inflation gauge influencing Fed policy expectations. Additionally, attention will remain on geopolitical developments, especially U.S.-Iran talks, and any fresh Fed or global central bank commentary. Earnings from major financial institutions and tech companies will also be closely watched for further clues on economic resilience and AI-related impacts.