Tariff developments were a key driver in commodity markets last week, with industrial metals climbing on supply concerns and gold surging to record highs as inflation pressures mounted. Oil struggled amid elevated inflation readings and fading geopolitical risks. Bond yields saw significant swings, with the 10-year Treasury yield jumping to a multi-week peak following the CPI report before retreating sharply to end the week lower. Meanwhile, uncertainty surrounding tariff specifics and market doubts over Trump’s commitment to enforcing them pushed the dollar to its weakest level since mid-December.

The week began with sharp declines due to the implementation of tariffs by the U.S. on Mexico, Canada, and China. However, markets recovered as the U.S. and Mexico reached an agreement to delay tariffs, easing immediate concerns about an escalating trade war. Additional relief came when Canada postponed its tariffs, and China signaled a delay in its retaliatory measures, leading to a rebound in equities midweek.

Optimism spread over to the bond market as well with longer term treasury yields holding steady despite year-ahead inflation expectations rising to an eight-month high per the University of Michigan survey released on Friday.

The exceptionally strong data sent the odds of future rate cuts by the Fed circling the drain and longer-term yields soared to their highest levels of the past year, putting pressure on stocks and bonds alike. The NASDAQ and Small Cap stock indices shed more than 2% for the week while the S&P 500, Dow Jones Industrial Average, and Mid-Caps gave up just under 2%.

Despite the strong dollar, commodities generally rose last week, led by a 5+% gain in oil. Gold also posted another solid weekly increase, seemingly due to renewed inflation concerns. Industrial Metals, however, lagged as weak global manufacturing data dampened growth expectations for raw materials in 2025.