Volatility surged last week as geopolitical tensions and economic uncertainty rattled financial markets. A heated exchange between U.S. President Donald Trump and Ukrainian President Volodymyr Zelensky led to the abrupt cancellation of a key minerals deal, casting doubt over the stability of U.S.-Ukraine relations. The diplomatic fallout triggered a flight to safety, with the dollar strengthening and crude oil swinging between gains and losses. Meanwhile, economic data sent mixed signals—January’s PCE inflation met expectations, but the Atlanta Fed slashed its Q1 GDPNow forecast from +2.3% to -1.5%, fueling concerns over a potential slowdown in growth.

‍

Elon Musk posted on X that GDP should be measured sans government spending, since the government spending is driving up GDP artificially. Given that, the Fed's getting bad information about the true state of the U.S. economy.

‍

Treasury yields fell as investors bought government bonds, which can be interpreted as fearing economic slowdown and increased confidence the U.S. can pay its debt on bonds. As traders assess whether last week’s turmoil was a temporary shakeout or the start of a broader correction, attention now turns to liquidity conditions and how big institutions are positioning portfolios, which may hold the key to market direction in the coming weeks.

‍