The US economy ended 2025 weaker than initially reported, with inflation proving more persistent, while Canada’s labour market experienced a significant contraction in February. These developments, alongside rising commodity prices and geopolitical instability, paint a concerning picture of the global economic landscape.
US Economic Slowdown and Inflation Concerns
US core PCE inflation rose to +3.1% in January, the highest rate since late 2023, with increases in December and January exceeding +4.5% annualized. The US economy expanded by an annualized +0.7% in Q4-2025, a downward revision from the initial +1.4% estimate and the weakest performance since a contraction in the first quarter of 2025. Downward revisions affected exports, consumer spending, government spending, and investment.
The January JOLTS report indicated more job openings than in December, but still represented a -6% decrease year-over-year. The University of Michigan sentiment survey fell in March to a three-month low, though inflation expectations did not decrease as anticipated. Rising fuel costs, up +18% from a year ago and +9% in a week, and war uncertainty were cited as key factors impacting sentiment, which is down -30% from two years prior.
Rising US Debt and Fiscal Imbalance
The Congressional Budget Office is raising concerns about the trajectory of US federal debt, which currently stands at 101% of nominal GDP and is projected to rise to 175% of GDP in 30 years without changes. Personal income taxes are up +10%, while corporate income taxes are down -33%, and tariff collections have increased by US$109 billion.
Global Economic Updates
Canada’s labour market shrank by an outsized -83,900 in February, following a -25,000 decrease in January, and missing forecasts for a +10,000 gain. Job losses were concentrated in full-time positions, down -108,400. In India, loan growth rose +14.5% in February, maintaining a high rate of expansion. New passenger vehicle sales in India hit a record high in February, up over +10% year-over-year. China’s new yuan loans rose +¥900 billion in February, slightly less than the previous year.
Prices for hard commodities are generally rising, with notable increases in plastics (+32%), steel (+13%), aluminium (+14%), and bitumen (+35%).
Financial Markets and Commodities
The UST 10yr yield is at 4.28%, up +8 bps from Friday and +17 bps for the week. The key 2-10 yield curve is flatter at +55 bps (-2 bps). The S&P500 is down -0.4% on Friday and -0.8% for the week. European and Asian markets also experienced declines. The Fear & Greed index has moved into the ‘extreme fear’ zone.
Gold prices are down -US$62 to US$5057/oz, down -US$98 from a week ago. Silver is down -US$4 at US$81/oz. American oil prices are up +US$2, at just under US$97/bbl, while Brent crude is over US$101/bbl. The Straits of Hormuz remain essentially closed.
The Kiwi dollar has slid to just under 58.1 USc, a -1c drop in a week. It is up +10 bps against the Aussie at 82.8 AUc. The TWI-5 is down -40 bps at just over 61.8, down -1.4% for the week. Bitcoin is at US$71,970, up +2.2% from yesterday and +5.4% from a week ago.
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