Inflation Hits

• Eurozone inflation rose to 2.9% in July, though price pressures varied significantly across different member states. • The Netherlands experienced the sharpest monthly increase at 1.5%, followed by Germany at 0.9% and France at 0.6%. • Conversely, Greece saw the most significant price drop at -1.4%, with Italy and Latvia also recording declines of -1.0% and -0.7% respectively.

• New Federal Reserve Chair Kevin Warsh presided over his first FOMC meeting, where the committee unanimously decided to keep interest rates unchanged at 3.5%-3.75%. • The decision comes as inflation has reached 4.2%, prompting Warsh to issue a clear pledge to prioritize price stability over political pressure for rate cuts. • Despite inflation concerns, the U.S. economy shows strength with the S&P 500 hitting record highs, strong jobs reports, and continued investment in artificial intelligence.

• The Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures (PCE) report, reached a three-year high in May. • This surge in prices indicates that inflation remains persistent, complicating the central bank's efforts to stabilize the economy. • The data suggests the Fed will likely keep interest rates steady for now, though the possibility of further rate hikes remains on the table if inflation does not dissipate.

The U.S. PCE inflation index reached 3.1% in February 2026 data released March 13, exceeding forecasts and fueling concerns over persistent price pressures. This reading, alongside Brent oil hitting $100, pushed back expectations for Federal Reserve rate cuts into late 2026. Economists note the figure complicates the Fed's dual mandate amid slowing GDP growth. Markets now price in steady rates through mid-year.

US Treasury volatility reached a nine-month high on March 13, 2026, driven by surging oil prices and tariff announcements stoking inflation worries. Bond market turbulence reflects broader economic uncertainty from geopolitical risks with Iran. Traders now price in a full Federal Reserve rate cut this year despite persistent inflation pressures. This spike underscores fragile market sentiment ahead of key economic data releases.