U.S. News

• Consumer Confidence

• • • The consumer confidence index dropped 7.0 points in February to 98.3, lower than the forecasted 102.4
    • The news marks the third consecutive decline and an eight-month low for the index
    • Concerns over tariffs, inflation, and job prospects / incomes are principally responsible for the drop

• Pending Home Sales

• • • In January, the pending home sales index fell 4.6% month-over-month to 70.6 in Janaury, an all-time low. Year-over-year, pending transactions declined 5.2%
    • Higher-than-average home prices, coupled with higher mortgage rates, strained affordability and suppressed demand
    • The Northeast PHSI rose, while the Midwest, South, and West PHSI all decreased. The South PHSI experienced the largest drop, 9.2%

• PCE Index

• • • The PCE index increased 0.3% last month, meeting forecasts. The core index also increased 0.3%
    • The twelve-month increase in inflation slowed from 2.6% to 2.5%, which is still above the Federal Reserve’s target of 2%
    • The twelve-month increase in the core index slowed from 2.9% to 2.6%. While this brings inflation closer to the Federal Reserve’s target, analysts predict that the news will keep the FOMC from reducing interest rates

• U.S. Tariff & Trade

• • • President Trump announced that the paused IEEPA tariffs on Canada and Mexico will take effect next week and increased the IEEPA China Tariff to 20% with an additional 10% tariff on Chinese goods on March 4th
    • The USTR has opened a comment period for interested parties to provide input on unfair foreign trade practices, focusing on G-20 nations and other countries with significant trade imbalances with the U.S., as a formal step toward implementing reciprocal tariffs
    • President Trump has warned of potential tariffs in retaliation against various foreign-imposed burdens, particularly Digital Service Taxes (DSTs) that are found to discriminate against U.S. companies
    • The USTR proposed fees up to $1.5M on Chinese-built vessels at U.S. ports to curb China’s shipbuilding dominance, which grew from 5% in 1999 to over 50% in 2023 due to state subsidies and preferential treatment for state-owned enterprises

  Current US Tariffs	Country of Origin	Effective Date	Tariff %	US Imported Goods Impacted
  Sec 301 China Origin Tariffs	China	7/16/2018	7.5% to 25%	Over three thousand codes in all chapters of the US Harmonized Tariff Schedule
  4 Year Review of Sec 301 China Origin Tariffs	China	9/27/2024	25% to 100%	382 imported goods, including electric vehicles, syringes, medical gloves, electric vehicle batteries, semiconductors, and solar cells.
  IEEPA China Tariff	China	2/1/2025	10%	Over three thousand codes in all chapters of the US Harmonized Tariff Schedule
  IEEPA Canada Tariff	Canada	Paused until 3/4/2025	25%	25% on all general Canadian goods; 10% on Canadian energy resources
  IEEPA Mexico Tariff	Mexico	Paused until 3/4/2025	25%	25% on all general Mexican origin goods
  Sec 232 Steel / Aluminum & Derivatives	All Countries	3/12/2025	25%	Steel and aluminum goods, including derivative articles of steel and aluminum

  Potential Actions	Country of Origin	Notes
  Reciprocal Import Tariffs	All Countries	Presidential memorandum on Feb 13th laid the groundwork for imposition of reciprocal tariffs on imports from individual countries with “unfair and unbalanced trade with the US.”
  European Tariff	EU and Other Countries	In an interview President Trump specifically called out EU and other countries having “troubling trade surpluses with the United States”
  Semiconductors	All Countries	President Trump stated tariffs on semiconductor chips would start at “25% or higher” but didn’t clarify when these will come into effect.
  Pharmaceuticals, Automobiles, Lumber	All Countries	During a speech on February 19, President Trump stated that tariffs on these products would be introduced “over the next month or sooner”

• Jobless Claims

• • • Initial jobless claims, a measure of how many workers were laid off across the U.S., increased
      to 242,000 in the week ended February 21, up 22,000 from the prior week.
    • The four-week moving average was 224,000, up 8500 from the prior week.
    • Continuing claims – those filed by workers unemployed for longer than a week – decreased by
      5,000 to 1.862 million in the week ended February 14. This figure is reported with a one-week
      lag.

• Fed’s Balance Sheet

• • • The Federal Reserve’s assets totaled $6.766 trillion in the week ended February 28, dpwn $16.2
      billion from the prior week.
    • Treasury holdings totaled $4.251 trillion, down $10.5 billion from the prior week.
    • Holdings of mortgage-backed securities (MBS) were $2.21 trillion in the week, down $6.2 billion
      from the prior week.

• Total Public Debt

• • • Total public debt outstanding was $36.22 trillion as of February 28, an increase of 5.1% from
      the previous year.
    • Debt held by the public was $28.86 trillion, and intragovernmental holdings were $7.31 trillion.

• GDP

• • • The latest annualized U.S GDP stands at $29.72 trillion as of December 31, an increase of 5.03% from the previous year
    • The total public debt-to-GDP ratio is at 121.87% as of December 31, an increase of 1.71% from the previous year

• Inflation Factors

• CPI:

• • • • The consumer-price index rose 3.0% in January year over year.
      • On a monthly basis, the CPI increased 0.5% in January on a seasonally adjusted basis,
        after increasing 0.4% in December.
      • The index for all items less food and energy (core CPI) rose 0.4% in January, after
        rising 0.2% in December.
      • Core CPI increased 3.3% for the 12 months ending January.

• Food & Beverages:

• • • • The food at home index increased 1.9% in January from the same month a year earlier,
        and increased 0.5% in January month over month.
      • The food away from home index increased 3.4% in January from the same month a year
        earlier, and increased 0.2% in January month over month.

• Commodities:

• • • • The energy commodities index increased 1.9% in January after increasing 3.9% in
      • The energy commodities index fell (0.5%) over the last 12 months.
      • The energy services index rose 1.8% in January after increasing 0.8% in December.
      • The energy services index rose 2.5% over the last 12 months.
      • The gasoline index fell (0.2%) over the last 12 months.
      • The fuel oil index fell (5.3%) over the last 12 months.
      • The index for electricity rose 1.9% over the last 12 months.
      • The index for natural gas rose 4.9% over the last 12 months.

• Supply Chain:

• • • • Drewry’s composite World Container Index decreased to $2,629.32 per 40ft
      • Drewry’s composite World Container Index has decreased by (24.7%) over the last 12
        months.

• Housing Market:

• • • • The shelter index increased 0.4% in January after increasing 0.3% in December.
      • The rent index increased 0.4% in January after increasing 0.3% in December.
      • The index for lodging away from home increased 3.9% in January after decreasing
        (2.1%) in December.

• Federal Funds Rate

• • • The effective Federal Funds Rate is at 4.33%, flat 0.00% year to date.

World News

• Middle East

• • • Hamas fulfilled its obligations during the 42-day ceasefire by handing over the last four dead hostages included in the agreement. In turn, Israel set free its last Palestinian prisoners, totaling over six hundred. The release was initially held up because Israel protested Hamas’s hostage-release ceremonies, which it said humiliated the hostages and the country. The first phase has resulted in the release of 33 Israeli hostages, including eight bodies, in exchange for more than 1,700 Palestinian prisoners
    • Israel announced on Sunday that it is stopping entry of any goods into the Gaza Strip, after the 42-day ceasefire expired without a longer-term agreement between Israel and Hamas. Prime Minister Benjamin Netanyahu threatened further action if Hamas continues to hold hostages. Hamas labelled Israeli actions a war crime against the Palestinians
    • Israel launched airstrikes late Tuesday at targets south of Damascus, which Israel claims held weapons or command centers. The strike comes days after Prime Minister Benjamin Netanyahu said the area must be demilitarized. Syria’s government condemned the Israeli army’s seizure of territory and demanded its immediate withdrawal
    • Abdullah Öcalan, the leader of the Kurdistan Workers’ Party (PKK), called for his followers to disarm. The PKK, designated as a terrorist group by Turkey and the US, has fought Turkey since the 1980s. The group initially fought for an independent Kurdish state and later demanded greater rights for Kurds

• Europe

• • • Ukrainian President Volodymyr Zelensky abruptly left the White House earlier than expected, after a meeting originally intended to align the two countries culminated in an on-camera clash between Zelensky and President Donald Trump. Zelensky did not sign the mineral-rights deal, and it is unclear how much military and political support the Trump administration is prepared to give Ukraine in the coming months
    • Shortly after the meeting, Trump ordered his national security staff to review whether the US could temporarily or fully halt ongoing weapons deliveries to Ukraine
    • Germany’s center-right Christian Democratic Union announced that it would seek a coalition government with its smaller center-left rival. The move serves to stave off the growing influence and power of the far-right Alternative for Germany (AfD) party, which doubled its share of the vote in the recent election

• China

• • • Chinese authorities are instructing artificial-intelligence leaders to avoid visiting the US, concerned that AI experts may divulge information about the nation’s progress, or that they may be detained and used as bargaining chips in US-China negotiations
    • President Donald Trump plans to impose an additional 10% tariff on imports from China, citing the country’s role in the fentanyl crisis. The new policy is scheduled to take effect on Tuesday and doubles the 10% tariff the Trump administration already imposed in February. China responded to the first round of tariffs with retaliatory duties and is expected to do so again. There are no ongoing negotiations for how to avoid the upcoming tariffs
    • Chinese leader Xi Jinping and Russian President Vladimir Putin reaffirmed ties over a phone call on Monday, with Xi telling Putin that Russia and China are “true friends who share weal and woe, [and] support each other and develop together.” The gesture comes as the United States seeks to engage Moscow, both to end the Ukrainian conflict and—to Beijing’s concern—potentially align Moscow and Washington against Beijing

• France

• • • French inflation cooled to its lowest level in four years, giving the European Central Bank further reason to cut interest rates. Consumer prices in France rose 0.9% in February, lower than the 1.5% forecasted by economists

• United Kingdom

• • • Prime Minister Keir Starmer met President Donald Trump in Washington, D.C. While no deal was signed, Trump said that there was “a very good chance” of a trade deal “where tariffs wouldn’t be necessary”

• Argentina

• • • Argentine President Javier Milei faces political backlash after a cryptocurrency he endorsed, $LIBRA, collapsed, wiping out $4 billion. Accused of promoting a scam, Milei denies involvement, calling it a private matter. A federal judge is investigating, while critics demand impeachment. The controversy threatens Milei’s credibility as he seeks U.S. support for economic reforms and an IMF loan

• Venezuela

• • • President Trump is planning to revoke a Biden-era license allowing Chevron to produce oil in Venezuela. Trump said that President Maduro’s failure to assist in deporting migrants led to the decision
  • Australia
  • • • Argentine Australia has passed a law banning social media access for under-16s, requiring platforms to implement age verification measures like facial recognition. While many parents and some experts support the move, others argue it may be ineffective, as children can find ways to bypass restrictions, and harmful content could shift to other online spaces
  • Thailand
  • • • Thailand estimates 30,000–100,000 people, including foreigners from 30+ countries, are trapped in Myanmar scam compounds run by Chinese gangs, forced into global fraud schemes. In response, Thailand cut power, restricted fuel, and is repatriating victims. The crackdown intensified after Chinese actor Wang Xing’s high-profile abduction exposed the region’s human trafficking crisis
  • Mexico
  • • • In response to the U.S. designating six Mexican drug cartels as foreign terrorist organizations, Mexico’s President Claudia Sheinbaum announced plans for constitutional reforms to protect national sovereignty, rejecting any U.S. military intervention while also proposing stricter penalties for foreign involvement in arms trafficking
  • Japan
  • • • Japan’s Trade Minister Yoji Muto plans a U.S. visit in March to seek exemptions from Trump’s proposed 25% tariffs on steel and car imports, highlighting the economic impact on Japan’s auto industry, while also discussing increased U.S. natural gas purchases and Nippon Steel’s stalled bid for U.S. Steel
  • Hong Kong
  • • • Hong Kong’s largest pro-democracy party, the Democratic Party, has taken an initial step toward dissolving, citing the restrictive political climate following Beijing’s crackdown on dissent, the 2020 national security law, and electoral changes that have effectively sidelined pro-democracy voices

  Commodities

  • Oil Prices
  • • • WTI: $69.76 per barrel
        • (0.91%) WoW; (2.73%) YTD; (11.18%) YoY
      • Brent: $73.18 per barrel
        • (1.68%) WoW; (1.96%) YTD; (12.55%) YoY
  • US Production
  • • • U.S. oil production amounted to 13.5 million bpd for the week ended February 21, up 0.0 million
        bpd from the prior week.
  • Rig Count
  • • • The total number of oil rigs amounted to 593, up 1 from last week.
  • Inventories

  • • • Crude Oil

        • Total U.S. crude oil inventories now amount to 430.2 million barrels, down (3.8%) YoY.
        • Refiners operated at a capacity utilization rate of 86.5% for the week, up from 84.9%
          in the prior week.
        • U.S. crude oil imports now amount to 5.820 million barrels per day, down (7.3%) YoY.

      • Gasoline

        • Retail average regular gasoline prices amounted to $3.10 per gallon in the week of
          February 28, down (6.8%) YoY.
        • Gasoline prices on the East Coast amounted to $3.12, down (5.6%) YoY.
        • Gasoline prices in the Midwest amounted to $3.02, down (4.8%) YoY.
        • Gasoline prices on the Gulf Coast amounted to $2.80, down (4.6%) YoY.
        • Gasoline prices in the Rocky Mountain region amounted to $3.14, up 1.3% YoY.
        • Gasoline prices on the West Coast amounted to $4.33, up 2.9%
        • Motor gasoline inventories were down by 0.4 million barrels from the prior week.
        • Motor gasoline inventories amounted to 248.3 million barrels, up 1.7% YoY.
        • Production of motor gasoline averaged 9.17 million bpd, down (2.6%) YoY.
        • Demand for motor gasoline amounted to 8.454 million bpd, down (0.2%) YoY.

      • Distillates

        • Distillate inventories decreased by 3.9 million in the week of February 28.
        • Total distillate inventories amounted to 120.5 million barrels, down (0.6%) YoY.
        • Distillate production averaged 5.162 million bpd, up 20.4% YoY.
        • Demand for distillates averaged 4.097 million bpd in the week, up 15.9% YoY.
  • Natural Gas
  • • • Natural gas inventories decreased by 261 billion cubic feet last week.
      • Total natural gas inventories now amount to 1,840 billion cubic feet, down (22.5%) YoY.

  

  Credit News

  High yield bond yields decreased 5bps to 7.12% and spreads increased 19bps to 305bps. Leveraged loan yields decreased 19bps to 8.57% and spreads increased 4bps to 476bps. WTD high yield bond returns were positive 30bps and leveraged loan returns were positive 5bps. 10-year Treasury yield decreased 21bps to 4.28%. Spreads widened due to growth concerns stemming from tariff threats and recent weakness in PMI, spending, consumer confidence, and labor market related data.

  High-yield:

  Week ended 02/28/2025

  • Yields & Spreads¹
    
  • Pricing & Returns¹
    
  • Fund Flows²
    
  • New Issue²
    
  • Distressed Level (trading in excess of 1,000 bps)²
    
  • Total HY Defaults
    

  ¹ Source: Credit Suisse High Yield and Leveraged Loan Index
  ² Source: JP Morgan

  Leveraged loans:

  Week ended 02/28/2025

  • Yields & Spreads¹
    
  • Leveraged Loan Index¹
    
  • Fund Flows²
    
  • New Issue²
    
  • Distressed Level (loan price below $80)¹
    
  • Total Loan Defaults
    

  Default activity:

  • Most recent defaults include: City Brewing ($886mn, 1/2/2025), The Container Store ($163mn, 12/22/2024), Party City ($264mn, 12/21/2024), Hearthside Food Solutions ($2.6bn, 11/22/24), Spirit Airlines ($1.1bn, 11/18/24), Franchise Group Inc ($1.1bn, 11/3/24), Exactech ($254mn, 10/29/24), American Tire Distributors ($975mn, 10/23/24), and Accuride ($291mn, 10/11/2024).

  CLOs:

  Week ended 02/28/2025

  • New U.S. CLO Issuance²
    
  • New U.S. CLO Issuance²
    

  Note:High-yield and leveraged loan yields and spreads are swap-adjusted

  ¹ Source: Credit Suisse High Yield and Leveraged Loan Index
  ² Source: JP Morgan

  Ratings activity:

  • S&P and Moody’s High Yield Ratings
    

  Appendix:

  Diagram A: Leveraged Loan Trading Levels
  
  Source: Credit Suisse Leveraged Loan Index

  Diagram B: High Yield and Leveraged Loan LTM Price
  

  Diagram C: Leveraged Loan and High Yield Returns
  

  
  

  Diagram J: Leveraged Loan Defaults by Sector – Full Year
  

  Diagram L: CLO Economics
  

  Diagram N: Developed Country GovBond Yields (%)
  

  Diagram O: S&P 500 Historical Multiples
  

  Diagram P: U.S. Middle-Market M&A Valuations (EV/EBITDA)
  

  Diagram Q: U.S. Large Cap M&A Valuations (EV/EBITDA
  

  Diagram R: Dry Powder for All Private Equity Buyouts
  

  Diagram S: Structured Credit Spreads
  

  Diagram T: Structured Credit Yield
  

  Diagram U: SOFR CURVE
  

  Diagram V: CMBS Spreads
  
  

  Freight Rates

  Drewry World Container Index
  

  China-Global & Shanghai Export Container Freight Index
  

  ZCGC RE Research

  Impacts to CRE post the LA wildfires:

  Residential:

  

  • Over 10,000 single-family homes across the Palisades and Eaton were destroyed, representing more than 50% of the stock
  • While less than 400 multi-housing structures were destroyed, more than 40,000 units were in the evacuation zone at the peak
  • Already the exacerbation of Los Angeles’ multi-housing supply shortage will result in elevated rent growth in the medium term

  Retail:

  

  • Over 1 m.s.f. of retail inventory was located within the Palisades and Eaton fires area and nearly half of the establishments were destroyed, which accounted for 34% of retail space
  • In the near-term, certain categories may see a boost as households rebuild and replace lost items, benefiting home-centers, hardware, and other consumer durables such as appliances at the expense of discretionary items and possibly food and beverages and entertainment
  • Longer term, mixed-use developments may be a way to address both the housing shortage exacerbated by the fire as well as replace the lost retail space, which has not been growing for a long time

  Industrial:

  

  • Rebuilding the 11,000 single-family houses alone would require just over 200 million board feet of lumber, depending on construction method. Even though all of this will not be stored and used at the same time, demand for IOS space and warehouses will be meaningful
  • Home appliances, furnishing and day-to-day necessities must be replaced, further bolstering the need for warehousing

  

  • The LA wildfires are projected to cause up to $250 billion in economic damage, rivaling Hurricane Katrina’s impact when adjusted for inflation, roughly 4% of California’s GDP
  • Insurers are expected to face costs between $35-45 billion