The dollar fell sharply after U.S. retail sales dropped 0.9%, far below expectations, signaling weaker consumer spending. While CPI and PPI exceeded forecasts, cooling PPI components reinforced the Fed’s cautious stance on rate cuts. The euro climbed toward $1.05, supported by weak U.S. retail sales and rate-cut expectations, while the British pound hit $1.2585 after Trump delayed tariffs, easing trade tensions. The Bank of England cut rates to 4.5% and lowered its 2025 growth forecast to 0.
Gold hit a record high as safe-haven demand surged amid Fed policy uncertainty, U.S. trade war concerns, and Trump’s mediation efforts in Ukraine. Silver reached a three-month high, supported by strong industrial demand, China’s renewable energy expansion, and rising investments in India and Indonesia.
U.S. 10-year Treasury yields ended the week flat, while 2-year yields slightly declined. Meanwhile, Japanese 10-year yields rose to 1.35%, marking a six-week consecutive increase.
U.S. inflation rose to 3% in January from 2.9%, exceeding expectations. Energy prices increased for the first time in six months, led by smaller declines in gasoline (-0.2%) and fuel oil (-5.3%). Transportation costs rose (8% vs. 7.3%), and used car prices rebounded (1% vs. -3.3%). Shelter inflation slowed to 4.4%, while core inflation unexpectedly rose to 3.3%. The monthly CPI climbed by 0.5%, which is above forecast, with shelter contributing 30% of the increase.
The UK economy grew 0.1% in Q4 2024, avoiding contraction. Services and construction expanded, but production fell for the fifth straight quarter (-0.8%), led by declines in transport equipment (-2.3%) and pharmaceuticals (-4%). Exports dropped 2.5%, while imports rose 2.1% due to gold transactions. Government spending increased (0.8%), while household consumption remained flat.
Germany's annual inflation rate eased to 2.3% in January from 2.6%, in line with forecasts. Food inflation dropped to 0.8%, while service inflation (4%) and goods inflation (0.9%) slowed. Energy prices fell 1.6%, mainly in motor fuels (-0.1%) and electricity (-3.6%). Core inflation hit a three-month low at 2.9%. Monthly CPI fell 0.2%, reversing December’s 0.5% increase.
U.S. jobless claims dropped by 7,000 to 213,000, below expectations. Continuing claims fell by 36,000 to 1.85 million, suggesting a resilient labor market. The four-week average declined to 216,000, and non-seasonally adjusted claims fell by 10,095, with notable drops in Pennsylvania and New York.
U.S. producer price inflation was 3.5% year-on-year in January 2025, unchanged from the previous month and surpassing market expectations of 3.2%. This marks the highest rate since February 2023.
U.S. retail sales plunged 0.9% in January, the largest drop since March 2023, far below the expected 0.1% decline. Consumer spending was hit by severe weather and LA wildfires. Major declines occurred in sporting goods (-4.6%), motor vehicles (-2.8%), and nonstore retailers (-1.9%), while gasoline stations (0.9%) and food services (0.9%) saw gains. Control group sales, a GDP component, fell 0.8%.
The dollar tumbled after weak retail sales (-0.9% vs. -0.1% expected), raising concerns about consumer spending. CPI and PPI exceeded forecasts, but key inflation components showed signs of easing, reinforcing the Fed's cautious stance. Trump signed an order for new tariffs, but markets remain hopeful for a negotiated solution. The euro climbed toward $1.05, driven by weak U.S. retail data and potential Fed rate cuts. Trump’s reciprocal tariffs, possibly starting in April, kept markets on edge. The pound hit $1.2585, a two-month high, as Trump delayed tariffs, easing trade concerns. UK GDP grew 0.1% in Q4, surpassing forecasts, while the BoE cut rates to 4.5% and lowered its 2025 growth outlook to 0.7%. The yen weakened as the dollar fell after Trump's tariff delay and PPI data signaled lower core inflation. Japan’s Economy Minister vowed to respond to U.S. tariffs, while the BOJ maintained its hawkish stance.
Gold hit a record high as demand for safe-haven assets surged amid Fed policy uncertainty. Trump pledged to mediate a Ukraine ceasefire, improving European risk appetite. Precious metals remained supported by potential U.S. trade wars and expectations of Fed rate cuts after weak retail sales. Silver reached a three-month high, driven by strong electrification demand. A rebound in U.S. ISM Manufacturing PMI and China’s 357 GW of new solar and wind power in 2024 strengthened silver’s appeal. India and Indonesia’s renewable energy investments further supported prices, alongside U.S. tariff concerns.
It was a week of rallies in U.S. indices. The Nasdaq surged by nearly 3%, followed by the S&P 500 with a 1.5% increase and the Dow with a 0.8% rise. Apple and Nvidia led the gains with nearly 5% increases, while Google fell by 3% and Tesla dropped by 4%, underperforming the broader market.
Eurozone Private Sector Growth Stagnates as Demand WeakensThe Eurozone's private sector output maintained slight growth in February, though the pace remained unchanged from the start of the year, according to the latest HCOB Flash PMI® survey by S&P Global. Weak demand, falling new orders, and job reductions signaled ongoing challenges, while input cost inflation surged to its highest level in nearly two years, leading to faster increases in output prices.
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U.S. Jobless Claims Edge Higher Amid Stable MarketThe number of Americans filing for unemployment benefits increased slightly for the week ending February 15, with initial jobless claims reaching 219,000, up 5,000 from the previous week’s revised figure, according to the U.S. Department of Labor. The prior week's claims were adjusted upward by 1,000, bringing the total from 213,000 to 214,000.
Detail Euro Stabilizes, Yen Slips Despite BOJ Hawkishness (02.21.2025)The euro held steady near 1.0500 ahead of key PMI data, while the yen weakened past 150 despite rising inflation and BOJ’s hawkish stance.
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