Last week was about jobs this week is about inflation.

After a volatile week, which saw the US markets have their worst week in 6 months, it felt that a bounce in US equity markets was due, so it proved on Friday. Technical indicators suggested that, in the short term, at least, US markets were a bit oversold. Friday’s jobs report, which came roughly in line with expectations, along with a speech at the University of Chicago in which Jerome Powell confidently predicted the economy was in a good place, was enough to give the US equity market a modest lift at the end of the week. Market traders have gone from pricing in one rate cut this year from the Fed, and that not until later in the year, to pricing in three rate cuts for 2025. It’s unlikely the first of those will come in the March meeting next week.

Last week’s data concerned economic growth; this week’s is about inflation. We get the monthly U.S. consumer price index report on Wednesday, which could undermine those interest rate expectations if it confirms that inflation is still simmering at levels that force the Fed to keep monetary policy tight. Expectations are for a modest drop from 3% to 2.9% in the headline rate. On Thursday, we get the monthly producer prices.

For the UK, it’s a quiet week until the end of the week, during which we get a selection of economic reports, including the latest estimates for GDP, the trade balance, and the monthly industrial and manufacturing data. Expectations are for a modest improvement in the economic outlook.

Economic and political uncertainty is weighing on US futures again this morning. This is one tiny little anecdotal economic indicator that illustrates possibly the weakening strength of the US consumer. The percentage of US consumers at least 60 days late on their car payments is at a record level. Higher than it was during COVID and much higher than during the financial crisis. There may be a multitude of reasons, but like many other forms of credit, financing a car a few years ago under zero interest rates was pretty straightforward, but now, not so much. Like many things in life, once you get used to a better experience, it’s hard to return to how things used to be; trading down is never easy. The Consumer Sentiment Index by the University of Michigan for March, out Friday, will also provide further evidence of the prevailing mood. Inflation expectations amongst US consumers have also been rising; we will also see if that trend continues as well.