Markets See-Saw Amid Soft Inflation and Growth FearsMarketsSee-SawAmidSoftInflationandGrowthFears

Sharp swings in stock and bond markets persisted this week, as investors weighed economic jitters against an encouraging inflation report. The Labor Department said on Wednesday the consumer price index was up 2.8% year-over-year in February, a softer reading than economists anticipated following a 3% rise in January. Core inflation, which strips out food and energy prices, also slowed more than expected, easing to 3.1% from 3.3%. With the Federal Reserve’s March meeting on tap next week, positive signs on inflation gave markets a reprieve after US officials sounded a cautionary note on the economy. Media interviews with President Donald Trump and Treasury Secretary Scott Bessent left investors feeling that government leaders are prepared to look past short-term volatility while pursuing an agenda of tariffs, tax cuts and spending reductions. “We’ve become addicted to this government spending, and there’s going to be a detox period,” Bessent told CNBC last Friday.

Tariffs and disappointing economic data have fed into fears of a slowdown and stress on corporate earnings—though some indicators might not be as worrisome as previously thought. The closely watched GDPNow model has recently put the US economy on track for an annualized contraction in the first quarter. But further analysis from the Atlanta Fed revealed that the decline can be traced to a surge in non-monetary gold imports brought on by an effort to stay ahead of potential tariffs. Excluding those gold shipments, the economy would be poised for modest first-quarter growth, according to an Atlanta Fed economist.

PGIM gathered a panel of experts, including former SEC Commissioner Mike Piwowar, to discuss how tariffs, congressional budget negotiations, and an evolving policy landscape could impact the economy and global financial markets.