Source: US Dept. of Treasury End of Day
• Rates fell last week with the 2-year Treasury note yield decreasing by nine basis points to 3.39% and the 5-year note by 14 basis points to 3.51%.
• January’s PPI rose 0.5% (vs. 0.3% expected), with sticky services likely to boost next month’s PCE inflation reading and reinforcing expectations that the Fed will not cut rates in March.
• Rising tariff uncertainty and fears of a military conflict with Iran pushed oil prices higher and contributed to declining equity markets, with the S&P 500 posting its first monthly loss since April 2025.
• Despite inflation concerns, investors moved into Treasuries amid elevated geopolitical risk, pulling the 10-year yield below 4% and triggering a similar drop in mortgage rates below 6%.
• With wages still barely outpacing inflation and job market signals mixed, upcoming employment reports will heavily influence the Fed’s path, though inflation is expected to ease in the second half of 2026, enabling future rate cuts.
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