Macro View - February 13, 2026 (Morning)

 ## Macro Snapshot Overnight markets were primarily influenced by the release of U.S. inflation data, which showed a core Consumer Price Index (CPI) increase of 2.4% year-on-year for January, slightly below expectations. This decline raises questions about the Federal Reserve's aggressive rate hiking path in response to inflation, as the market begins to assess the implications for monetary policy going forward. The backdrop of persistent inflation, coupled with stronger-than-anticipated service costs, has intensified the debate on future interest rate adjustments. Global markets reacted cautiously, with Asian equities showing mixed performance amid concerns over technology sector vulnerabilities. The dollar maintained firmness ahead of key economic reports, signaling a potential flight to safety as investors brace for additional inflationary pressures. The bond market saw increased demand for Treasuries, especially in the wake of the inflation report, which suggests that investors are hedging against uncertainty. ## Overnight Global Markets - **Asia:** Asian markets exhibited mixed trading results. Japanese equities faced pressure, with the Nikkei 225 dropping 1.24% as investors reacted to AI disruption fears in various sectors, including technology and logistics. Meanwhile, Chinese stocks demonstrated resilience, buoyed by optimism around AI advancements despite broader market concerns. - **Europe:** European markets opened with cautious optimism as investors digested mixed earnings reports and awaited economic data. The focus was on inflation metrics and potential rate implications from the European Central Bank. Concerns about AI disruption also loomed, weighing on tech-heavy indices. ## Economic Data Today - **U.S. CPI at 8:30 AM EST** - Expectation: 2.4% - This data is pivotal as it will provide insights into inflation trends and may influence Fed rate decisions moving forward. ## Fed & Central Banks Recent commentary suggests that the Federal Reserve may be reassessing its aggressive rate-hiking strategy given the latest inflation data. Markets are beginning to price in a potentially more cautious approach, with discussions around the likelihood of rate cuts later in the year gaining traction. Internationally, the Bank of Japan also hints at potential policy shifts, indicating a readiness to adjust its monetary stance if inflation targets are met this spring. ## Rates & Currencies - Treasury yields fell, with the 10-year yield around 3.45%, reflecting increased demand for safe-haven assets as inflation data prompted a reassessment of rate hike expectations. - The U.S. dollar remained strong, holding steady as investors sought safety ahead of the CPI release. This strength is likely to impact equities negatively, especially in sectors sensitive to currency fluctuations. ## Commodities - Oil prices are under pressure, with forecasts indicating a potential weekly drop due to oversupply concerns and forecasts of a supply glut. The market remains cautious ahead of U.S. inventory data. - Gold prices have rebounded slightly after recent declines, influenced by geopolitical tensions and the upcoming CPI report. ## Macro Risks to Watch - The potential for a more aggressive Fed response if inflation proves sticky could disrupt markets. - Continued AI disruption fears impacting technology sectors, which may lead to broader market volatility. - Geopolitical tensions, particularly in the Middle East, could have ripple effects on global energy prices and market sentiment. ## Positioning Implications Traders should focus on adjusting positions in anticipation of possible shifts in Fed policy, particularly if inflation continues to show signs of moderation. Caution is advised in tech stocks facing AI disruption fears, while defensive sectors may present more stability. Investors could also consider increasing allocations to commodities like gold as a hedge against inflation and geopolitical risks.