Despite a light economic calendar, the final week of February was defined by high-stakes policy shifts and “scenario-driven” volatility. Investors navigated a whirlwind of headlines, from the reinstitution of a 10% universal tariff under Section 122 following a SCOTUS ruling, to a viral, post-apocalyptic AI research report from Citrini Research that fueled concerns over tech overcapacity. While Friday’s PPI report showed service-side inflation remains stubborn—likely keeping the Fed on the sidelines through midyear—the bond market provided a silver lining: the 10-year Treasury yield dipped toward 4.00% and 30-year mortgage rates fell below 6% for the first time since late 2022 as investors sought safe havens amid geopolitical and trade uncertainty.
Economic Highlights:
- January’s producer price index, which is a measure of wholesale inflation, rose 0.50%. This was above estimates for a 0.30% increase. More concerning was the increase in core PPI, which excludes food and energy prices, recorded a 0.80% gain. Services prices primarily drove the increase, with a 0.80% monthly rise while goods prices fell 0.30%. The report is problematic because it is a precursor to the Personal Consumption Expenditure (PCE) report, the Fed’s preferred measure of inflation, which is likely to spike higher just prior to the next FOMC meeting.
- Tech remained under pressure this week, dogged by concerns over lofty AI capital expenditure plans and AI disruption in software and IT services, finance, and logistics and transportation. That’s led investors to pivot from MAG-7 to HALO. HALO, short for “heavy assets, low obsolescence” firms include factory owners, fast-food restaurants, and commodity companies. Reflecting this trend year to date, the S&P 500’s materials, consumer staples, and industrial sectors are up 16.87%, 14.39%, and 13.91%, respectively.
Theories, Tariffs, and the AI Ghost in the Machine
It may have been a light week in terms of economic data, but the final trading days of February still had plenty of volatility in store as investors contended with the implications of last week’s SCOTUS tariff ruling and a mixed, yet stubborn, PPI report. The negative mood was palpable from the start, but markets managed to hold their own for the majority of the week with dip-buyers buoying the declines—particularly in tech.
That was until Friday, when the PPI release drew a red line under the host of items investors have spent the year worrying about: tariffs, inflation, the Fed, and the path for rates. Interestingly, despite a “hot” 0.5% headline reading, the ten-year U.S. Treasury continued its month-long rally, dipping toward the 4.00% level. Simultaneously, the average 30-year mortgage fell below 6%—its lowest reading since late 2022. While investors are concerned about inflation, high-quality bonds have benefited from inflows to “safe havens” due to the unpredictability around tariffs and AI overcapacity—not to mention geopolitical jitters regarding a potential strike against Iran.
Investors have had a lot to process over the last week. Going back to last Friday, markets were elated to learn that broad tariffs had been struck down by SCOTUS, only to see them reinstituted by the Administration at a 10% universal rate later that afternoon under Section 122 of the Trade Act of 1974. Over the weekend, the Administration signaled it would increase the rate to 15%, but as we stand today the 10% floor has been instituted.
Meanwhile, investors awoke Monday to a new AI research report from Citrini Research that quickly went viral, entitled “The 2028 Global Intelligence Crisis.” Despite the preface clearly noting “what follows is a scenario, not a prediction,” the memo—written through a retrospective, post-apocalyptic lens—details how widespread adoption of agentic AI rapidly erodes traditional business models, financial markets and the broader social contract. Think of what happened to Blockbuster once Netflix started streaming, only now at warp speed. The report did little to soothe the nerves of investors already wringing their hands over the massive, debt-fueled capital expenditures being spent to develop technology that—at least according to the report—will ultimately cannibalize them. It is worth reading here if only to know what the hoopla is all about.
By comparison, Friday’s PPI release was almost a relief. It brought the week’s news cycle full circle, showing that while goods prices are falling, service-side inflation remains sticky, with tariffs looming as a contributing factor. It unquestionably was an emotionally driven market this week, and the absence of other major releases likely amplified the volatility more than it might have otherwise. The PPI is certainly worth noting because of what it implies for the Fed’s preferred inflation gauge (PCE), and it is likely keeping them on the sidelines through midyear.
In summary, it was one of those weeks that was heavy on theories but light on data. That didn’t keep it from being a whirlwind, and if Citrini’s research is to be trusted, you might just want to unplug your computer before you go to bed tonight.
The Week Ahead
Key reports include nonfarm payrolls, manufacturing, and services.
Safety Tips for Travelers
The news has been dominated this past week by warnings for travelers to avoid Mexico and for tourists in the country to shelter in place. These alerts were issued following the killing of one of the country’s drug cartel leaders this past Sunday by the Mexican army that resulted in eruptions of violence in parts of Mexico. With the upcoming spring break travel season and for those traveling for work or vacations, below are tips from safety experts to help keep you and your loved ones safe.
Before Leaving Home
Today marks one month since the disappearance of Nancy Guthrie, and the case has highlighted home safety and home security concerns. Wireless cameras and alarms can be tampered with or removed, and bad actors can use a Wi-Fi blocker to disable cameras. Experts note that doorbell cameras remain an important safety tool but also advise that they should be considered a part of a layered, overall home security system that may include a range of features such as monitored alarms, motion lights, panic buttons, hardwired cameras, and cloud recording for security footage. Before leaving home, travelers are advised to schedule someone to check on their home and pick up the mail and any deliveries while they are away and to consider signing up for USPS Informed Delivery to keep track of packages and important mail.
Packing Preparation
U.S. airlines lose around 2 million pieces of luggage each year. When lost luggage can’t be reunited with its owner, it ends up in a lost luggage facility in Alabama that receives thousands of new bags each day. Many frequent travelers use a strategy of “cross packing” with a spouse or travel companion so if a checked bag is lost, they will have essential items and clothing in a different bag. Using AirTags or Tiles in every piece of luggage and even in your wallet is another helpful tip. Covered luggage tags that conceal your address and phone number are a better alternative to the paper tags from the airline. Some travelers include their personal information inside their luggage as an additional safety measure in case the luggage is lost and the tag falls off.
Passport and Phone preparation
More than 300,000 U.S. passports are lost or stolen each year, according to Kevin Coffey, a security expert. Taking photos of your passport pages and storing them securely can help expedite the process of replacing your passport and any required visas if those items are lost or stolen. Some travelers tape to the exterior of their passport a note that says, “if found, please call….” or “in case of emergency….” for travelers who may become injured or incapacitated. Travelers can change the lock screen of a stolen or lost device by signing into their iCloud or Android account online and marking their phone as lost. This will lock their phone immediately, display a custom message, such as a phone number of a friend or family member to call if the device is found. Marking a device as lost or stolen will also disable features like Apple Pay and continue showing the device’s location. If your phone is stolen, be sure to contact your carrier to suspend service and change your password.
Secure Other Important Documents and Personal Items
Make digital and physical copies of driver’s license, travel insurance, and tickets. Store copies separately from the originals. Consider using encrypted cloud storage so you can access documents from anywhere if needed. Experts also recommend carrying only what you need for the day or for the trip. Leave extra credit cards, large amounts of cash, jewelry, and unnecessary identification secured at home or in your hotel safe.
Research Your Destination Carefully
Before booking a trip, review government travel advisories, local news reports, and reputable travel sources. Safety experts recommend understanding the specific neighborhoods where you will stay – not just the country or city in general. The safety of the area around your hotel both during the day and at night is particularly important to know. Conditions can vary widely within the same destination and time of day.
Create a Detailed Itinerary and Share It
One of the simplest yet most overlooked safety measures is sharing your travel plans with a trusted friend or family member. Provide flight details, hotel information, and any planned excursions. Establish regular check-in times, especially if traveling solo. For business travelers, ensure your employer has a copy of your itinerary and schedule. Many organizations have travel risk management programs that can provide real-time alerts and assistance if needed.
Have an Emergency Plan
Even with careful planning, situations can change quickly. Protests, severe weather, transportation strikes, or security incidents may disrupt travel plans. Monitor local news and sign up for travel alerts from official sources. Register international travel with the Department of State and sign up for the free Smart Traveler Enrollment Program that will send you alerts from U.S. embassies and consulates abroad.
Practice Smart Social Media Use
Posting real-time updates about your location can inadvertently signal that you are away from home—or exactly where you are staying. Consider sharing photos after you return and adjust privacy settings to limit who can view your posts.
Know Your Healthcare Coverage
Medicare typically doesn’t cover health care for people traveling outside the U.S. Determine if travel medical insurance might be an option for you.