Consumer fear

A week of sobering economic news for America ended with, well, more of the same. The long-term inflation expectations of US consumers rose to its highest level in almost three decades. Their reasons? Growing concern that President Donald Trump’s accumulating number of tariff threats against friend and foe alike will translate into higher prices.

Consumers said they expect prices will climb at an annual rate of 3.5% over the next five to 10 years, according to the final February reading from the University of Michigan. The rate is the highest since 1995, based on data compiled by Bloomberg. All five components of the index deteriorated, including a drop in buying conditions for big-ticket items. And more than half of consumers in the survey expect the unemployment rate to rise over the next year, the highest since 2020.

Interestingly enough, and perhaps a sign of how America’s furious polarization may in part tinge economic attitudes, the spike was almost entirely driven by views among survey respondents who identify as Democrats.

Nevertheless, inflation expectations have taken on renewed importance as the prospect of trade wars is weighing on the outlook for prices paid by consumers. Economists have warned that, while Trump has only followed through on one of his tariff threats (against China), the threats themselves are hurting the economy by creating uncertainty.

“The concern with higher inflation expectations is that it can be self-fulfilling,” said Elizabeth Renter, senior economist at NerdWallet. “What people and businesses expect to happen, often does.” —David E. Rovella

What You Need to Know Today

Stocks had their worst session so far in 2025 after getting smacked around by weaker-than-expected economic data and those historic inflation expectations. From consumer sentiment to housing and services, Friday’s readings unsettled investors at a time when the Federal Reserve is in no rush to cut rates. The S&P 500 lost over 1.5% and bonds rallied. A notional $2.7 trillion of options tied to equities and exchange-traded funds was set to expire, which usually amplifies price swings. Also contributing to the volatility was a rally in Covid-19 vaccine makers. “Is this the start of the correction?” said Andrew Brenner at NatAlliance Securities, in a note titled Weaker Economic Outlook Trumps Inflation Fears. “Add in three people have sent us a new bat virus story [more on that below]. Does anyone want to go into the weekend short Treasuries?” Here’s your markets wrap.

Bank of Canada Governor Tiff Macklem says underlying price pressures may be cooler than indicated by the central bank’s two preferred measures of core inflation. Inflation data released earlier this week showed the headline figure ticked up to 1.9%, with the two core measures—so-called trim and median—both rising to 2.7%. However, when policymakers look at a broader set of measures of underlying inflation, it appears to be just over 2%, he said. It’s the strongest signal yet that the central bank may be starting to move away from the two measures as key guideposts for setting interest rates.

In what may be the biggest crypto hack in history, crypto exchange Bybit said it lost almost $1.5 billion worth of tokens. A hacker took control of one of Bybit’s offline Ethereum wallets, Chief Executive Officer Ben Zhou announced in a social media post Friday, and an estimated $1.46 billion in assets flowed out. Founded in 2018, Bybit is one of the world’s largest crypto exchanges, processing more than $36 billion in daily average trading volume. The Dubai-headquartered platform had roughly $16.2 billion in assets on its exchange prior to being hacked, according to reserves data from CoinMarketCap. The hack surpassed the $611 million stolen from Poly Network in 2021. (As for who is responsible, researchers are already pointing the finger at North Korea.) Meanwhile, the rest of the crypto market took a really big hit as a result.

Popular for its stimulating and pain-relieving properties, the herb kratom can be as easy to buy as a bag of chips in many parts of the US. That’s also raised questions about whether kratom should be more closely regulated. A new Food and Drug Administration-funded clinical trial expected to begin this summer seeks to finally provide an answer to longstanding questions about kratom’s potential for abuse by comparing the leaf’s draw to that of the addictive opioid oxycodone. Watch the Bloomberg Originals mini-documentary, The Growing Toll of America’s Booming Kratom Industry, to learn more about kratom’s rise—and who is behind it.

France and Estonia are said to be hosting an emergency meeting of European defense ministers on Monday to discuss how to bolster support for Ukraine in the face of the Trump administration’s foreign policy reversals. The video conference will include about a dozen counterparts from countries including the UK, Germany, Italy and Poland as well as representatives from the European Union and NATO. And while the US is seeking negotiations for peace with the Kremlin—without the involvement of Europe or Kyiv—Vladimir Putin doesn’t appear to be in a hurry.

Researchers in China said they discovered a new coronavirus in bats that enters cells using the same gateway as the virus that causes Covid-19. This virus hasn’t been detected in humans yet. The lab finding does raise the possibility that this new bat virus could spread from animals to humans, researchers said in a paper published Tuesday in the journal Cell. The Wuhan virus research center is known for its work on bat coronaviruses. One theory of how the Covid pandemic began is that it leaked from that lab, perhaps through an infected worker. Institute researchers have previously denied working on any viruses that could have led to the global health catastrophe. There were 7 million confirmed Covid-19 deaths during the pandemic, though estimates of the actual death toll range as high as 27 million.

What You’ll Need to Know Tomorrow

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