Weekly economic and financial commentary

Wells Fargo Research Team Wells Fargo

Summary

United States: The U.S. Economy Had Solid Momentum Ahead of Russia's Invasion

February's employment data showed the economy had strong momentum ahead of Russia's invasion of Ukraine and amid the Fed's shift to a more hawkish tone on monetary policy. Nonfarm employment surged by 678,000 jobs, and job growth over the prior two months was revised higher by 92,000 jobs. This week's factory orders and ISM manufacturing survey also pointed to strengthening momentum in the factory sector.
Next week: Trade Balance (Tuesday), CPI (Thursday), U. of Mich. Consumer Sentiment (Friday)

International: Bank of Canada Kicks Off Rate Hike Cycle

Canada's Q4 GDP came in stronger than expected in the fourth quarter, rising 6.7% quarter-over-quarter and setting the stage for the Bank of Canada's (BoC) monetary policy meeting. The central bank kicked off its rate hike cycle at its March monetary policy meeting with an initial, and widely expected, 25-bp policy rate increase to 0.50%.
Next week: Brazil CPI (Tuesday), Mexico CPI (Wednesday), ECB Rate Decision (Thursday)

Interest Rate Watch: Rates on a Roller Coaster Ride

Russia's invasion of Ukraine last week, followed by wide-ranging and severe sanctions placed on Russia by numerous Western countries, sent global bond yields into motion this week.

Credit Market Insights: Russia-Ukraine War Increases Market Volatility

Russia's invasion of Ukraine has prompted sweeping financial and economic sanctions. S&P Global cut the Russian government's rating to junk, while Moody's has issued a junk warning. In reaction, credit default swaps on Russia's shorter-term government debt has risen to record levels.

Topic of the Week: A Climb Down from Inflation Highs Resisted by Bread and Butter

Food commodities have been a strong driver of inflation over the past two years, and the CPI for food has risen at the strongest pace in nearly 40 years, tacking on one percentage point to the 7.5% year-over-year increase in headline CPI in January.

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Wells Fargo Research Team

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AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold extends gains nearing $4,200 as US Dollar struggles

Gold heads north for the second consecutive day, trading near $4,180, with bulls aiming for the $4,230 area, the top of October’s trading range. Precious metals have been boosted by lower US Treasury yields and dovish comments from Federal Reserve officials this week, which have undermined speculative support for the Greenback.

Busy week for Ripple’s RLUSD: What changes for stablecoin holders?

Ripple’s RLUSD is gaining ground across institutional finance, with a major bank launching custody services, a new wallet integration making it easier for developers to build payments and agentic experiences on the network, and a brokerage platform planning to use the stablecoin for settlement.

Hot inflation, falling yields: A new test for global markets

Global markets are confronting a difficult combination: renewed inflation pressure, expensive capital and growing scrutiny of the investment supporting the AI boom. The most revealing development this week was the demand for government bonds even as US inflation accelerated. My assessment is that investors should treat this as a test of financing resilience.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.