Author: Zac Martin, Senior Investment Analyst
Week Ending March 13th – Crude Awakening
Inflation Updates: Both headline and core CPI for February were the same as the January report, growing 2.4% and 2.5%, respectively. Given the recent upward shift in interest rates, investors continue to price in a potentially higher and more persistent inflation situation. According to CME’s FedWatchTool the market is now pricing in one Fed Funds cut for 2026, a month ago the market was pricing in two. So, the question investors are trying to solve is what does future inflation look like? Below is an analysis from Apollo on headline CPI if this oil shock is transitory. Temporarily high oil levels would translate to marginal increases to inflation, as outlined below, the problem would only be exacerbated if high oil prices persist.
GDP & JOLTS: 2025 Q4 GDP was revised lower to 0.7%, on an annualized basis. This report was lower than Q3, primarily from the Government shutdown in October/November. However, there were pockets of strength throughout the report. For example, consumer spending grew 2.4% while gross private domestic investment grew 3.3%, which continued to be driven by AI investment. In terms of the JOLTS report for January, there was a substantial increase in job openings, 6,946K from 6,550K. However, Hires and Total Separations remained relatively unchanged. As mentioned last week, the weakness in the labor market has likely been due to an apparent hiring freeze rather than substantial layoffs.
The Week Ahead:
- PPI (3/18)
- FOMC w/ Projections (3/18)
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