3 Things You Need to Know This Week | US Jobs, Consumer Sentiment, Monetary Policy

Transcript

Mathew White:

Hello and welcome to 3 Things You Need to Know This Week—our regular series designed to help you sift through the noise across financial media and understand what really matters for markets.

To stay up to date with our latest market insights, subscribe to our YouTube channel or visit FisherInvestments.com.

And with that, here are three things you need to know this week.

First, the latest on job market data.

This week we'll get fresh US jobs data from the Bureau of Labor Statistics. Looking back, unemployment ticked down to 4.4% in December while nonfarm payrolls grew by 50,000 jobs. Investors will be keeping a close eye on the latest labor market data and gauging the potential impacts from recent corporate layoff announcements.

Regardless of how these numbers come in, we think it's important for investors to put jobs data in context. First, jobless claims remain historically low, and we see few signs that the labor market is as harsh as some headlines allege.

Importantly, investors should remember that jobs numbers are lagging indicators, telling us what has already happened in the economy. Stocks, on the other hand, are forward looking pricing in expectations well into the future.

With that in mind, we urge investors not to put too much weight into any single jobs report and instead focus on forward-looking indicators and broader economic trends.

Next, US consumer sentiment.

This week, we'll get the University of Michigan's preliminary consumer confidence data for February. This consumer sentiment index has been used for decades, but political biases have handicapped some of its usefulness as of late.

The University of Michigan's Consumer Sentiment Index was revised up to 56.4 in January, an increase from December's 52.9. This is the second consecutive month of improvement and the strongest reading since August, but consumer sentiment remains historically low.

Notably, there is a significant political skew in the survey results, illustrating how the political party investors favor can materially impact your views on how the economy is doing.

Economic expectations among Republican respondents plunged after Presidents Barack Obama and Joe Biden were elected president, while Democratic respondents felt much more confident—and the opposite pattern unfolded after President Donald Trump's election in 2016 and 2024.

Notably, during the last two presidential terms, supporters of both major US political parties have reflected lower highs and lower lows in the range of economic expectations— despite economic reality largely normalizing following the pandemic bust and boom.

Now, political bias can lead investors to unwise decision making, which is something we caution against. But to the extent that political bias and frustration depress investor sentiment, it lowers the bar economic reality must surpass to deliver positive surprise, which, all else equal, supports a continued bull market.

Next, the latest on monetary policy.

On Thursday, the European Central Bank, or ECB, and the Bank of England, also known as the BoE, are set to make monetary policy announcements. Both central banks are expected to keep rates steady.

Rate cuts by the ECB and BoE in 2024 and 2025 helped to steepen Europe's yield curve, creating an underappreciated tailwind for economic growth and European banks in particular. A positive yield curve—where long-term rates exceed short-term rates— encourages lending by boosting bank profitability.

This trend helped European stocks, particularly yield curve-sensitive Financials, outperform the broader market in 2025. In contrast, while the US yield curve has steepened, it remains flatter than Europe's yield curve, providing less incentive for loan growth.

Looking ahead, we expect Europe's yield curve to remain steeper than the US, which is one of many factors we believe should support European market outperformance in 2026.

And that's it for 3 Things You Need to Know This Week.

 For more of our thoughts on markets, check out This Week in Review, released every Friday. You can also visit FisherInvestments.com.

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