Barclays_Global_Macro_Thoughts_Time_for_a_breather_but_don_t_expect_a_sustained_rally

Restricted - ExternalSIGNATURE17 March 2025Global Macro ThoughtsTime for a breather, but don't expect a sustained rallyAjay Rajadhyaksha+1 212 412 7669ajay.rajadhyaksha@barclays.comBCI, USMax Kitson +44 (0) 20 3555 2386 max.kitson@barclays.com Barclays, UK Where noted in the source notes, the views expressed within this report are taken from previously published research. For further detail, including important disclosures and analyst certifications, please follow the links on each page and on page 8.This document is intended for institutional investors and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors under U.S. FINRA Rule 2242. Barclays trades the securities covered in this report for its own account and on a discretionary basis on behalf of certain clients. Such trading interests may be contrary to the recommendations offered in this report.Please see analyst certification(s) and important disclosures at the end of this presentation.FICC ResearchGlobal MacroRestricted - ExternalCompleted: 17-Mar-25, 11:19 GMT Released: 17-Mar-25, 11:23 GMTRestricted - ExternalThe world at a glance•The US avoids a shutdown; Germany’s Greens agree on a deal•Central banks will stand pat this week, but we see a hawkish dotplot•Stagflation fears start to rise, and consumer confidence falters•We revise up our tariff assumptions, and push down our US GDP call to below 1%•Making sense of it all17 March 20252Restricted - ExternalThe Fed will worry more about inflation than growth this week17 March 20253•Better US core CPI last week didn’t translate into softer PCE inflation 1oPPI details point to another elevated core PCE print; we expect 0.36% m/moWe also think the 3mma of super-core inflation has now risen to 0.4% m/m•Inflation is proving sticky even before tariffs start to kick in; the Fed won’t be happy 1o5-10y household inflation expectations rose to 3.9% in the U Michigan March readingoThe survey has moved online and seems affected by political partisanshipoEven so, the median now stands 70bp over the Fed’s comfort zone of 2.8-3.2%•Meanwhile, even as sentiment is deteriorating, the hard data hasn’t softened as much 1oJanuary JOLTS showed that labor demand was steady, though it didn’t factor DOGE effectsoInitial jobless claims for the week ending March 6 were back down to 220k from 241koWe do expect a weak Q1 GDP print, but not anywhere close to the Atlanta Fed’s -2.4%oRetail sales, IP, and housing starts this week should help clarify Q1 GDP this week•Given this sticky inflation / no recession world, the Fed should be balanced this week 1oThe statement should acknowledge that inflation expectations have moved upoWe also expect the SEP to show slower growth, higher U3, and higher inflationoBut we expect the dots to be hawkish to market pricing, showing just one cut this year1 Global Economics Weekly: From uncertainty to multi-shock (14 March 2025)Restricted - ExternalEyes on new