We've just published our US Macro Weekly - Full Report Here

• The flash Services PMI for February was the most notable single macro data print of the week as it surprisingly slipped to its first sub-50 reading since Jan 2023. The press release noted a spike in input cost pressures but services inflation hit a five year low on a lack of pricing power.
• It was just one example among several surveys conducted in February that portrayed increasing uncertainty and inflation pressures, which appear to be reflecting the threat of tariffs and impact of other government policy shifts – a summary is below.
• Jobless claims were close to expected, with initial claims pointing to no sign of deterioration from last month’s payrolls reference period (at a healthy level), and unsurprisingly no sign of an increase from DOGE cuts. See below for detailed context around federal layoff/buy-out headlines.
• The minutes to the January FOMC meeting contained a surprising amount of discussion on balance sheet policy, potentially auguring a pause in QT – but it was no surprise that the FOMC expressed no hurry to cut rates again. The latter message was also conveyed by several members this week, including the first post-meeting commentary by St Louis Fed President Musalem, a hawk and 2025 voter.
• Fed rate cut expectations are again ending the week on the softer side, with more than 40bp of cuts priced for 2025, although a next cut is still only fully priced for the September meeting.
• The upcoming US economic calendar is backloaded, with the second release for Q4 national accounts on Thursday before the January PCE report on Friday.

A new survey from Galluphas shown a “near-complete reversal” in the overall Economic Confidence Index score for Republicans and Democrats, since Trump assumed office in January.  

• Gallup notes: “Although the ECI remains unchanged at -19, underlying partisan shifts illustrate a more dynamic picture, as Republicans and Democrats reset their expectations for the direction of the economy given likely economic policy shifts under a new presidential administration.
• “The two major parties’ scores are likely to diverge further in the coming months as partisans increasingly tie the state of the U.S. economy to Trump’s administration and its policies rather than to Biden’s.”
• The partisan shift may suggest an erosion of support for Trump amongst independents who backed his re-election. The Washington Post reported on Thursday: "Multiple polls this week have shown his approval rating dropping into more normal territory for him, in the mid-40s. And a new Washington Post-Ipsos poll crystallizes a number of warning signs for Trump’s agenda."

Figure 1: Outlook for the Economy, by Party, 2024-2025, “Net economic outlook score (% getting better minus % getting worse)” 

Source: Gallup

Punchbowl News reporting on X that House Speaker Mike Johnson (R-LA) is eyeing a Tuesday floor vote for a budget resolution to unlock reconciliation on a mammoth package that will cover the bulk of President Donald Trump's agenda. The timeline is a tight turnaround for the House, with at least 10 Republican House Reps reportedly wavering on the package due to concerns over deficit implications and speculated cuts to welfare programmes. 

• Comes after the Senate passed a budget resolution to underpin a narrower defence/border security/energy bill early this morning following an all-night 'vote-a-rama' in the Senate. That resolution, endorsed by Senate Majority Leader John Thune (R-SD) and Budget Committee Chair Lindsay Graham (R-SC), will provide optionality as a 'Plan B' if Johnson can't whip backing for his broader blueprint- the preferred strategy for President Trump.
• If the House successfully passes their budget blueprint, horse trading will get underway to synchronise the two chambers around an identical resolution that will unlock the reconciliation process – the procedural mechanism by which the governing party can bypass the Senate filibuster to pass legislation along party lines.

Bloomberg reporting that France and Estonia will host a meeting of European defence ministers on Monday to discuss bolstering support for Ukraine. The video conference is expected to include representatives from the United Kingdom, Germany, Italy, Poland, and the European Union. 

• The meeting will be the third summit of Ukraine's partners in a week, following a move by the Trump administration to restore diplomatic relations with Russia and prod Kyiv toward a negotiated peace settlement.
• Bloomberg notes: “The defense ministers’ meeting will coincide with a trip to Kyiv — three years after Russia invaded Ukraine — by several European leaders, among them the European Commission President Ursula von der Leyen. EU foreign ministers will also meet in Brussels on Monday."
• French President Emmanuel Macron will meet bilaterally with US President Donald Trump at the White House on Monday. UK Prime Minister Keir Starmer is expected to meet with Trump at the White House on Thursday.