Fourth-quarter GDP revised down to just 0.7% growth

Commerce Department: economic growth was much slower than expected in Q4 2025, while core inflation rose at the start of 2026. The growth slowdown combined with rising core inflation increases the risk of a hawkish Fed response, likely supporting higher short-term rates and bond yields and posing headwinds for cyclical assets.

Analysis

Commerce Department: economic growth was much slower than expected in Q4 2025, while core inflation rose at the start of 2026. The growth slowdown combined with rising core inflation increases the risk of a hawkish Fed response, likely supporting higher short-term rates and bond yields and posing headwinds for cyclical assets.