Baffled Week in Review
Greenland, construction spending, & more
This week brought us updates on the Fed’s favorite measure of inflation, a few housing stats, construction spending, and a baffling Greenland-related conflict between the U.S. and NATO that may no longer be a conflict. It also brought us a new Ravens’ head coach, but I can’t tell if I should be happy about that. Next week will bring parts of the U.S. weather more commonly found on Greenland. Bundle up!
Monday
Martin Luther King’s Birthday
Here’s a nice primer on Martin Luther King, Jr.’s views on economics.
Tuesday
The Greenland Saga
President Trump tacitly threatened to invade Greenland and explicitly threatened to levy 25% additional tariffs on EU countries defending Greenland if Denmark didn’t agree to sell the land to the U.S. on Friday.
This caused U.S. stocks to tank, with the S&P 500 falling more than 2% from the Friday close to the Tuesday afternoon low, and U.S. bond yields to surge, with the 10-year treasury yield jumping to its highest level since last August.
As has become the norm, President Trump walked back those threats, assuring he wouldn’t invade Greenland or levy the additional tariffs and citing a “framework of a deal” for U.S. to gain control of some land on the island (no details on that yet). Talk of the TACO trade surged in financial markets (Wednesday/Thursday), though that chatter has fizzled by Friday morning. Accordingly, stocks rebounded and bond yields fell following the deescalation, but they’re still lower and higher, respectively, than they were last Friday.
This kind of policy volatility (and tariff/immigration policies themselves) and the bond market’s occasional disapproval helps explain why borrowing costs remain stubbornly elevated despite the Fed cutting the federal funds rate by 1.75 percentage points over the past roughly 1.5 years.
TSA Checkpoint Travel Numbers
Air travel was 3.2% higher year over year during the first three weeks of 2026, according to TSA data. While the winter storm set to devastate large portions of the eastern U.S. will affect the data for the coming weekend, underlying fundamentals remain encouraging.
Oil Stuff
Gas prices inched higher, ending a streak of seven straight weekly declines, but remain exceptionally low at $2.93 gallon. This remains a stimulus for American consumers. Diesel prices also ticked higher but are still about $0.19/gallon cheaper than one year ago.
