Remember all those smug predictions about rate cuts by Q2 2026? Yeah, well, someone forgot to tell the inflation data. Today, it all got incinerated. Burned to a crisp.
The Ugly Truth: January 2026 Core PCE
Friday, February 27, 2026, started like any other Friday, everyone chattering about next month's Fed meeting, convinced we'd see a strong signal for cuts. Then the January 2026 Core PCE data hit. Boom.
The Street consensus, pretty much everyone, had it pegged at 2.5% year-over-year. A nice, steady glide path down. What we got was 3.1% YoY. Let that sink in. A full 60 basis points higher than anticipated. Six-zero. It wasn't just a miss; it was a full-blown punch to the gut. All those "soft landing" narratives? Gone.
This isn't some obscure metric. This is the Federal Reserve’s preferred inflation gauge. The one they look at. The one they base decisions on. This tells them, loudly and clearly, inflation isn’t dead. Not by a long shot. It’s twitching, it’s fighting back, and it probably just bought Powell and company another few months of 'higher for longer' rhetoric.
Bond Market Mayhem and The Dollar's Spurt
You want to see real pain? Look at the bond market. Immediately after the PCE number dropped, Treasury yields spiked. The 2-year yield, which was flirting with 4.5% yesterday, shot past 4.8%. The 10-year wasn't far behind, moving above 4.4%.
Suddenly, all those long duration bets look like amateur hour. I mean, seriously, how many people got absolutely smoked on that today? I had a few shorter duration plays that saved my bacon, but I know plenty of folks who were positioned for a straight line down in rates. It's rough out there.
And then there's the dollar. Forex markets went wild, obviously. The USD Index just rocketed up, strong against pretty much everything. EUR/USD dropped hard, like, really hard. Japanese Yen, Sterling – you name it. A stronger dollar means even tighter financial conditions, making everything else a bit more expensive for global buyers. It’s a vicious cycle sometimes.
Equities Take a Dive, Especially Tech
Of course, equities followed suit. The Nasdaq, always the most sensitive to interest rate expectations, dumped 2.5% in the first hour of trading. Tech stocks, the darlings of the AI boom, took the brunt of it. NVIDIA, Microsoft, Apple – all down. Growth stocks just can't stomach higher discount rates.
I always say, when the market gets surprised, the highly leveraged, high-multiple names get hit first and hardest. They live and die on cheap money and future growth projections. When the cost of that money goes up, those projections get severely haircutted. The S&P 500, too, finished down nearly 2%. It was a bloodbath for anyone buying dips early in the day. Check live stock market prices here to see just how much damage was done.
This whole thing just goes to show how quickly sentiment can pivot. One data point. That's all it takes sometimes to unravel months of careful positioning and market chatter. All that talk about "peak hawkishness" and "imminent cuts" for this Write about today's (Friday, February 27, 2026) most trending and breaking financial news — whatever is the BIGGEST story right now in markets, economy, crypto, or global finance. Pick the single hottest topic people are actually searching TODAY. Be ultra-specific with real names, numbers, and events. Do NOT write generic market overview. 2026 market, totally premature.
What Now for the Fxpricing Blog Outlook?
So, where does this leave us? Well, the "Fed pivot" narrative just got pushed out, probably until summer, if not later. Anyone talking about multiple cuts in 2026 is delusional after today.
The market was pricing in close to a 70% chance of a May cut earlier this week. Now? It’s probably 20%, maybe even less. People are starting to whisper about the possibility of another hike, which, I mean, come on, but you can’t totally dismiss it now. This Write about today's (Friday, February 27, 2026) most trending and breaking financial news — whatever is the BIGGEST story right now in markets, economy, crypto, or global finance. Pick the single hottest topic people are actually searching TODAY. Be ultra-specific with real names, numbers, and events. Do NOT write generic market overview. strategy is key. I'm definitely staying away from anything that needs low rates to justify its valuation.
My advice? Batten down the hatches. I’m scaling back my equity exposure, focusing on cash and short-term bonds. This environment just got a whole lot trickier. Volatility is here to stay, and "how to Write about today's (Friday, February 27, 2026) most trending and breaking financial news — whatever is the BIGGEST story right now in markets, economy, crypto, or global finance. Pick the single hottest topic people is actually searching TODAY. Be ultra-specific with real names, numbers, and events. Do NOT write generic market overview." means hunkering down for now. The best Write about today's (Friday, February 27, 2026) most trending and breaking financial news — whatever is the BIGGEST story right now in markets, economy, crypto, or global finance. Pick the single hottest topic people are actually searching TODAY. Be ultra-specific with real names, numbers, and events. Do NOT write generic market overview. tips often come down to capital preservation.
