U.S. consumer prices increased at their slowest pace since May 2025, putting the spotlight on bond markets and the outlook for interest rates. The consumer price index was up 2.4% year-over-year in January, the Labor Department said last Friday. Following the report, trading in interest rate futures suggested that investors grew more confident in a cut this summer from the Federal Reserve, based on the CME Group’s FedWatch Tool. In a speech on Tuesday, Fed Governor Michael Barr said he “would like to see evidence that goods price inflation is sustainably retreating”—in addition to stable labor market conditions—before considering further rate cuts. Austan Goolsbee, Chicago Fed President, told CNBC on Tuesday that there are “several more rate cuts that can happen in 2026” if inflation continues to ease, although “some warning signs” remain.

A report on U.S. GDP on Friday is expected to confirm that the economy stood out among its developed-market peers to end 2025. Economists were looking for a 2.5% annualized growth rate for the fourth quarter, according to forecasts compiled by Dow Jones. The International Monetary Fund estimated in January that U.S. growth will hit 2.4% in 2026, while growth is forecast to slow slightly in the eurozone, U.K. and Japan versus the prior year. The U.S. Supreme Court’s decision in a closely watched tariff case could alter the global outlook. Investors are on alert for a potential ruling on Friday, when justices return from a winter recess.

Despite higher U.S. tariff rates, there are signs that global trade is re-rerouting, rather than retreating. At the 2026 Investment Conference in Kuwait, Cathy Hepworth, Managing Director and Head of Emerging Market Debt at PGIM, discussed how economic, geopolitical and technological shifts are reshaping the global landscape.