US stocks fell for the fourth straight week, with all major indexes in negative territory for the year, driven by renewed tariff announcements from the Trump administration and growing recession fears. Inflation data showed signs of easing, with February’s consumer and producer price indexes rising less than expected. Core CPI saw its lowest annual increase since April 2021, helping to ease concerns about stagflation. The University of Michigan’s Consumer Sentiment Index dropped sharply, reflecting growing concerns about personal finances, jobs, and inflation, with year-ahead inflation expectations rising to 4.9%. Treasuries gained as yields fell on soft inflation data, but municipal bonds lagged. Credit markets showed mixed performance — IG spreads widened, and HY bonds saw pressure, especially in lower-quality sectors vulnerable to tariffs.
European stocks fell, with the STOXX Europe 600 Index down 1.2%, as concerns over US tariffs and monetary policy uncertainty weighed on sentiment. Although the ECB recently cut rates again, several policymakers expressed doubt about another cut in April, citing inflation risks and geopolitical uncertainty. Meanwhile, the UK economy shrank by 0.1% in January, driven by a drop in production, despite a better quarterly growth rate. In Germany, coalition parties reportedly agreed to a major spending boost, proposing a EUR 500bn infrastructure fund and easing debt limits to support defense and growth. Optimism over potential Ukraine-Russia ceasefire talks helped limit market losses.
