IGA Capital Weekly Economic Brief

March 11th, 2025

Market Overview: Inflation, Trade, and Economic Sentiment

Next week’s Consumer Price Index (CPI) report will be the focal point for markets, with expectations set at 0.3% MoM and 2.9% YoY. A higher-than-expected print could reignite inflation concerns and shift sentiment on Federal Reserve policy. February’s inflation data is expected to be more reliable than January’s, as companies traditionally implement price adjustments at the start of the year.

The Producer Price Index (PPI), set for release on Thursday, will provide further clarity on inflationary pressures and help the Fed refine its outlook. Additionally, last week’s decision to delay tariffs on Mexico and Canada until April 2nd has eased concerns about the immediate impact of trade restrictions on economic growth, though uncertainty remains over long-term negotiations.

Meanwhile, bond markets face a critical week, with CPI and PPI releases coinciding with the March 14th government budget deadline. The Trump administration has proposed a six-month extension, allowing more time to negotiate a comprehensive fiscal package that includes extensions to the 2016 tax cuts.

Weakness in economic indicators is also raising growth concerns—the Manufacturing ISM and ADP employment reports both missed expectations, while Friday’s payroll data showed only a slight miss (151k vs. 160k expected). However, a rising unemployment rate (4.1%) and an uptick in underemployment (8.5%) signal potential cracks in the labor market.

Key Economic Data This Week

Monday, 3/10 – NY Fed Consumer Survey
Tuesday, 3/11 – JOLTS Report, 3-Year Treasury Auction ($58B)
Wednesday, 3/12 – CPI Report, 10-Year Treasury Auction ($39B)
Thursday, 3/13 – Jobless Claims, PPI Report, 30-Year Treasury Auction ($22B)
Friday, 3/14 – University of Michigan Sentiment

Next Week: Retail Sales, Housing Starts, Building Permits, FOMC Rate Decision, Philly Fed Index.

Treasury Yields & Fixed Income Trends

Treasury markets saw heightened volatility last week, reacting to conflicting trade updates and economic data.

Early in the week, weaker-than-expected Manufacturing ISM data caused yields to drop 4-5 bps.
On Tuesday, tariffs on Mexico and Canada were enacted, raising concerns about slower economic growth and sending 2-year and 10-year yields to their lowest levels since October 2024.
Midweek, Treasury yields reversed losses after optimism over a Ukraine minerals deal and potential tariff relief for Mexico and Canada. The 10-year rose 8 bps to 4.25%, and the 2-year climbed back to 3.99%.
Friday’s payroll report (151k vs. 160k expected) briefly fueled a rates rally, but Fed Chair Powell’s comments emphasizing that the Fed is in no rush to cut rates reversed those gains.

Treasury Yield Summary

2-Year Treasury Yield: 4.00% (+1 bps)
10-Year Treasury Yield: 4.30% (+9 bps)
Yield Curve (2s/10s Spread): Steepened 9 bps to 30 bps
Current 10-Year Yield: 4.26% (-4 bps this morning)

Federal Reserve & Rate Expectations

Fed Chair Jerome Powell reinforced a cautious stance on monetary policy, stating:

"Despite elevated levels of uncertainty, the U.S. economy continues to be in a good place. We do not need to be in a hurry and are well-positioned to wait for greater clarity."

When pressed about trade and immigration policies, Powell acknowledged high uncertainty but emphasized that the Fed remains data-driven, focused on long-term economic impacts rather than short-term fluctuations.

With the next FOMC meeting on March 18-19, the Fed is expected to hold rates steady as it evaluates inflation trends and labor market conditions. Following a 100-bps rate cut in 2024, policymakers remain committed to a "wait-and-see" approach before considering further adjustments.

Markets are currently pricing in 71 bps of rate cuts by year-end, up from 69 bps last week.

Implied Fed Funds Rate Forecast

March 19: 4.322%
May 7: 4.232%
June 18: 4.075%
July 30: 3.958%
September 17: 3.804%
December 10 (Final 2025 Meeting): 3.626%

Source: Bloomberg

Strategic Insights for IGA Capital Clients

As inflation and trade policies continue to shape market conditions, businesses must proactively manage financing strategies. IGA Capital specializes in structured finance solutions, helping companies navigate debt financing, trade credit, and private capital markets.

Corporate & Project Finance – Customized solutions for growth
Trade & Export Credit – Optimized cross-border financing with Export Credit Agencies (ECAs)
Alternative Capital Strategies – Access to private credit, institutional investors, and structured funding

For businesses looking to secure funding in a dynamic rate environment, connect with IGA Capital today info@iga.capital