1. The FOMC kept the Fed funds target range unchanged at 3.5%–3.75%, in line with consensus.

• Governor Stephen Miran dissented in favor of a 25 bps cut, bringing the total dissents this year to three.

• The FOMC statement now characterizes the unemployment rate as “being little changed in recent months” rather than “[having] shown some signs of stabilization,” which suggests less confidence in the labor market having stopped deteriorating. The statement also adds that “The implications of developments in the Middle East for the U.S. economy are uncertain.”

– LLM-based sentiment score tilted slightly dovish.

• The Summary of Economic Projections points to improved growth prospects, little change to the unemployment rate, higher inflation, but no changes to the path of the policy rate (two cuts in 2026).

– This chart shows a more detailed look at how the “dots” have shifted.

– The median longer-run real GDP growth rose from 1.8% to 2%.

– The market’s implied rate cuts for 2026 fell slightly.

– The dollar strengthened.

2. February’s headline PPI jumped by 0.7% month over month, while core PPI inflation rose by 0.5%, both well above consensus estimates, signaling firm upstream inflation pressures even before the recent oil-driven supply shock.

• Services PPI inflation remained firm, while goods PPI inflation also jumped, driven by nondurable goods.

• Business markups rose for a third consecutive month, indicating improving margins.

• Incorporating the PPI data, Nomura forecasts that core PCE rose by 0.376% in February.

• Higher oil prices will add further upward pressure to PPI.

3. Factory orders rose by a tepid 0.1% month over month in January.

• Excluding the volatile transportation sector, orders improved by a modest 0.4% month over month.

• Growth in core capital goods orders was revised upward from flat to 0.1%.

4. Mortgage applications were little changed as the 30-year fixed mortgage rate ticked up to the highest level this year.

• Refinancing activity fell considerably.

5. Business inflation expectations for the coming year jumped 20 basis points to 2.1%, according to Atlanta Fed’s latest survey.