Trade policy uncertainty continued to shape financial markets this week as replacement tariffs under Section 122 of the Trade Act of 1974 took effect following the Supreme Court’s decision striking down the administration’s broad use of the International Emergency Economic Powers Act (IEEPA). President Trump initially set the global import surcharge at 10%, effective February 24, before raising it to the statutory maximum of 15%. Compounding the pressure on markets, the January Producer Price Index (PPI) came in significantly above expectations, underscoring persistent inflationary pressures and further dimming prospects for near-term Federal Reserve rate cuts.
Key economic releases pointed to mixed signals this week. Wholesale prices rose faster than anticipated in January, with the PPI for final demand increasing 0.5% month-over-month and 2.9% year-over-year. Excluding food and energy, core PPI jumped 0.8% month-over-month, well above the consensus estimate of 0.3%, driven largely by a surge in trade services margins and raising concerns about the upcoming Personal Consumption Expenditures (PCE) price index. On a more encouraging note, the Conference Board’s Consumer Confidence Index rose to 91.2 in February, snapping a six-month losing streak, while the S&P CoreLogic Case-Shiller 20-City Home Price Index showed home values continued to appreciate, rising 1.4% annually in December. Of note, the Freddie Mac 30-year fixed mortgage rate averaged 5.98% this week, dipping below 6% for the first time in over three years, offering some relief on affordability. Weekly initial jobless claims edged up to 212,000, consistent with a stable employment backdrop.
Treasury yields declined this week as concerns over potential slower growth and escalating geopolitical tensions supported demand for government bonds. The 2-year U.S. Treasury yield fell to approximately 3.41%, while the 10-year dropped to approximately 3.98% at the time of this writing, its lowest level since November 2025. The S&P 500 declined nearly 1% for the week, weighed down by a pullback in technology stocks. West Texas Intermediate (WTI) crude oil rose to about $67 per barrel and gold traded near $5,255 per ounce, as President Trump warned Iran has days to reach a nuclear agreement.
Looking ahead, the February employment report will be watched closely for evidence of continued labor market strength amid tariffs, persistent inflation pressures, and a cautious Federal Reserve. The Chandler team expects the Federal Reserve to hold rates steady in the near term, with an additional 25 basis point cut likely before the end of July, bringing the target range to 3.25%–3.50%. As front-end rates gradually move lower, we believe the yield curve will continue to steepen. In this environment, portfolios are positioned to benefit from improving curve dynamics while remaining grounded in strong liquidity and disciplined credit risk management.
Next Week: S&P Global U.S. Manufacturing PMI, S&P Global U.S. Services PMI, ISM Manufacturing PMI, ISM Services PMI, Factory Orders, ADP Employment Change, Trade Balance, Nonfarm Payrolls, Unemployment Rate, Jobless Claims, Durable Goods Orders.
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Data source: Bloomberg, Federal Reserve, and ADP. This report is provided for informational purposes only and should not be construed as specific investment or legal advice. The information contained herein was obtained from sources believed to be reliable as of the date of publication, but may become outdated or superseded at any time without notice. Any opinions or views expressed are based on current market conditions and are subject to change. This report may contain forecasts and forward-looking statements which are inherently limited and should not be relied upon as an indicator of future results. Past performance is not indicative of future results. This report is not intended to constitute an offer, solicitation, recommendation, or advice regarding any securities or investment strategy and should not be regarded by recipients as a substitute for the exercise of their own judgment. Fixed income investments are subject to interest rate, credit, and market risk. Interest rate risk: The value of fixed income investments will decline as interest rates rise. Credit risk: the possibility that the borrower may not be able to repay interest and principal. Low-rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk. Market risk: the bond market, in general, could decline due to economic conditions, especially during periods of rising interest rate.
S&P Corelogic Case-Shiller 20-city non-seasonally adjusted home price index (widely known as the Case-Shiller index)
The S&P Corelogic Case-Shiller home price index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the nation.