Growth Holds, Inflation Eases (16-20 February)

Cooling US inflation reshaped rate expectations, pressured the dollar and lifted metals.

Softer US CPI reinforced expectations of rate cuts later this year, pressuring the dollar and pushing Treasury yields to multi-month lows, while payroll strength and steady unemployment highlighted underlying economic stability.

In Europe and the UK, muted growth kept easing discussions alive, even as the ECB signaled comfort with euro strength. Gold and silver reacted sharply to shifting rate expectations, energy markets tracked geopolitical negotiations, and bond markets adjusted to a slower, yet still uneven global expansion backdrop.

Currencies

Dollar Index: The dollar index traded just below 97 in thin Presidents’ Day conditions. The greenback weakened last week after softer inflation reinforced expectations of rate cuts later this year. Annual CPI slowed to 2.4% and monthly inflation to 0.2%, while payrolls remained firm and unemployment dipped, pointing to a steady labor backdrop.
Euro: The euro held near $1.19, up about 0.4% on the week and close to January’s four-year high above $1.20. Support came from signals that the ECB is comfortable with recent euro strength, alongside mixed US data.
British Pound: Sterling hovered near $1.36 after UK GDP rose just 0.1% in Q4 2025, below expectations and marking the slowest annual pace since Q2 2024. Weak industrial output and construction showed a fragile recovery. Markets still price further Bank of England easing after rates were kept at 3.75% with a dovish split.
Japanese Yen: The yen slipped to around 153 per dollar after Japan’s Q4 growth rose only 0.1% q/q, missing forecasts. Consumer spending increased just 0.1%, reflecting soft domestic demand.

Commodities

Gold Pulls Back After CPI Rally

Gold slipped under $5,030 per ounce on Monday, giving back part of last session’s 2% surge sparked by softer US CPI. The inflation slowdown strengthened expectations for more than two Fed rate cuts this year, though early-week trade turned more measured.

Brent Steadies Before US–Iran Talks

Brent crude hovered around $67.7 per barrel after marking its first weekly decline of the year. A second round of US–Iran negotiations is scheduled for Tuesday, with Tehran signaling possible compromises if sanctions relief is addressed. Separate US-led discussions on Ukraine continue, with limited prospects for a rapid return of Russian supply.

Silver Slides as Fed Outlook Holds

Silver drifted toward the $75 area as softer US CPI did not materially shift expectations for policy easing, with no rate cuts anticipated in March or April. Rising risk across regions tied to Iran could renew demand for defensive assets, providing underlying support.

Fixed Income

U.S. 10-Year Treasury

The US 10-year yield declined to 4.07% on Friday, its lowest level since early December, after softer CPI data reinforced expectations for rate cuts this year. Annual inflation eased to 2.4%, below forecasts, while monthly CPI slowed to 0.2%. Rate-cut pricing increased to around 61 basis points from 58, with the probability of an April move edging higher. June remains the most likely timing for an initial 25-basis-point reduction, followed by another in September, while March is expected to see no change. US bond markets are closed on Monday for Presidents’ Day.

UK 10-Year Gilt

UK 10-year gilt yields remained below 4.5%, the lowest since January 22, following weaker growth data. GDP rose just 0.1% in Q4 2025, missing projections, while annual growth slowed to 1.0%, the weakest since Q2 2024. Monthly data showed unexpected contractions in industrial production and construction, highlighting the economy’s fragile footing.

Japan 10-Year Government Bond

Japan’s 10-year yield held near 2.2% as Q4 2025 growth underwhelmed. The economy expanded 0.1% quarterly after a prior contraction, falling short of expectations, while consumer spending increased only 0.1%, signaling subdued domestic demand amid elevated inflation. Prime Minister Sanae Takaichi reaffirmed plans for proactive fiscal support following her February 8 election victory, including a two-year reduction in the 8% food sales tax. She emphasized funding the measures through subsidies, targeted tax adjustments, and non-tax revenues rather than new bond issuance, framing the approach as fiscally sustainable.

Economic Data

US CPI (MoM) (Jan): U.S. monthly CPI rose by 0.2% in January, slightly below expectations, indicating easing near-term inflation pressures.

US CPI (YoY) (Jan): Annual CPI slowed to 2.4% in January from 2.7%, reinforcing the narrative of cooling inflation.

US Core CPI (MoM) (Jan): Core CPI increased by 0.3% in January, in line with expectations, showing underlying inflation remains high.

US Initial Jobless Claims: U.S. initial jobless claims rose to 227K, slightly above expectations, suggesting mild cooling in labor market conditions.

US Existing Home Sales (Jan): U.S. existing home sales fell to 3.91 million in January, missing expectations of 4.16 million, pointing to continued weakness in the housing market.

US Nonfarm Payrolls (Jan): U.S. nonfarm payrolls increased by 130K in January, well above forecasts of 66K and the previous 48K, reflecting strong labor market momentum.

US Retail Sales (MoM) (Jan): U.S. retail sales were flat in January, coming in at 0.0%, missing market expectations of a 0.4% increase and easing from the previous 0.6% gain, pointing to softer consumer spending momentum.

US Core Retail Sales (MoM) (Jan): Core retail sales also stagnated in January, posting 0.0% growth versus forecasts of a 0.3% rise, indicating weaker underlying consumption trends.

Latest Analysis

Gold Slips After 2% CPI Rally (16.02.2026)

Early data showed firm payroll growth and a drop in unemployment, signaling a steady labor backdrop.

Detail

U.S. Credit Card Debt Hits New High

U.S. credit card balances have climbed to a record $1.3 trillion, according to the latest household debt data, underscoring the growing role of revolving credit in consumer finances. The increase reflects steady spending alongside higher prices and borrowing costs, with the total number of open credit card accounts also reaching an all-time high.

Detail