Macro View - February 03, 2026 (EOD)

 ## Macro Summary Today’s trading was heavily influenced by macroeconomic factors, particularly the ongoing turmoil in the technology sector, which has been characterized by a significant rotation out of growth stocks and into more stable sectors. With software and semiconductor stocks facing steep declines amid rising concerns over valuation and the sustainability of growth, investors appeared to seek refuge in consumer staples and defensive sectors. This rotation reflects a broader sentiment of caution in the market as participants anticipate potential economic headwinds. In addition to sector rotation, geopolitical developments are also shaping market dynamics. The situation with Iran and the U.S. has created volatility in oil prices, which has further impacted investor sentiment towards energy stocks. The recent agreement between the U.S. and India to reduce tariffs may provide some economic optimism; however, uncertainty around inflation and interest rate expectations continues to loom over market participants. Overall, the market's reaction today indicates a heightened sensitivity to both macroeconomic indicators and geopolitical tensions. ## Economic Data Reaction - **S&P Global U.S. Manufacturing PMI:** 53.5 vs. 52.5 expected - This stronger-than-expected reading suggests a more robust expansion in the manufacturing sector, which could provide support for economic growth projections. However, the immediate market reaction was muted as investors focused more on the ongoing tech sell-off. ## Fed & Central Banks Federal Reserve's Stephen Miran resigned from his White House position, which could lead to potential shifts in Fed policy discussions. Market analysts speculate that this resignation may influence the Fed's approach to interest rate policy, especially as the nomination of Kevin Warsh for Fed Chair faces scrutiny from Democratic senators. Expectations around rate cuts later this year are increasing, with some analysts predicting that the Fed may need to act more aggressively if economic conditions worsen. ## Rates & Bonds - 10-Year yield: 3.92% (+0.12%) - 2-Year yield: 4.64% (+0.14%) - The yield curve continues to steepen, suggesting that investors are pricing in potential rate cuts while also reflecting concerns over economic growth. This steepening could benefit financial institutions that thrive in a higher interest rate environment. ## Currency & Dollar The U.S. dollar showed signs of strength today, bolstered by rising yields and a risk-off sentiment in equity markets. The dollar index climbed 0.5%, which typically places pressure on commodities priced in dollars. This strength in the dollar can create headwinds for U.S. exporters while making imports cheaper. ## Commodities Wrap - Oil: $85.00 (+2.50%) - Prices rebounded as tensions with Iran escalated, driving concerns about supply disruptions. - Gold: $1,950 (+$50) - After a significant sell-off earlier in the week, gold staged a recovery as investors moved towards safe-haven assets amid uncertainty in equity markets. - Silver: $23.50 (+$0.50) - Silver also saw a rebound, but the overall volatility in precious metals markets remains a concern. ## Global Markets Close - Europe: Stocks closed mixed with the FTSE 100 down 0.35% while the DAX gained 0.20%. The divergence reflects varying investor sentiment amid localized economic concerns. - Asia setup for tonight: Asian markets are expected to react cautiously, with futures indicating a mixed open as traders digest the U.S. tech sector's performance and geopolitical developments. ## Tomorrow's Macro Focus Key data releases to watch include the U.S. Job Openings and Labor Turnover Survey (JOLTS), which could provide insights into labor market tightness and wage inflation pressures. Additionally, any updates from the Fed regarding the Warsh nomination or broader monetary policy stance will be pivotal for market sentiment moving forward. Investors will also be keeping an eye on global economic indicators that may signal shifts in growth projections.