Macro View - February 13, 2026 (EOD)

 ## Macro Summary Today, the U.S. markets reacted to the January Consumer Price Index (CPI) report, which showed inflation at 2.4%, lower than expected. This news provided a boost to investor sentiment as it alleviated concerns about persistent inflation and its potential impact on Federal Reserve monetary policy. The lower inflation reading is expected to influence the Fed's approach in the upcoming meetings, with traders increasing bets on potential rate cuts later in the year. The overall market responded positively, with major indices recovering some of the losses incurred in previous sessions, as investors weighed the implications of this cooler inflation data. Additionally, geopolitical tensions, particularly regarding U.S. military movements in the Middle East and ongoing concerns over Iran, contributed to market volatility. The combination of easing inflation data and geopolitical risks created a complex trading environment. Investors are now keenly observing how these factors will play out, particularly in relation to the Fed's policy direction and overall economic stability. ## Economic Data Reaction - **CPI Report:** 2.4% vs. 2.7% expected - Markets rallied on the announcement, as the lower-than-expected inflation rate reduces pressure on the Fed to maintain aggressive interest rate hikes. ## Fed & Central Banks Market participants are closely monitoring comments from Federal Reserve officials regarding future monetary policy. The recent CPI report has led to an increase in speculation about potential rate cuts later this year, with traders now pricing in a 50% chance for three rate cuts by year-end. This represents a significant shift in sentiment compared to earlier in the year when expectations leaned toward continued tightening. Investors are waiting for further guidance from the Fed, particularly any comments from Chair Jerome Powell in upcoming engagements, which could provide clarity on the central bank's stance. ## Rates & Bonds - 10-Year yield: 3.45%, down 10 basis points - 2-Year yield: 4.05%, down 12 basis points The yield curve steepened slightly as the short-term rates fell more sharply than the long-term yields, indicating a shift in market expectations regarding future Fed rate moves. The narrowing gap between the 2-year and 10-year yields suggests that the market is pricing in a more dovish Fed outlook following the latest CPI data. ## Currency & Dollar The U.S. dollar experienced slight weakness against major currencies today as the CPI data shifted expectations regarding Fed rate cuts. This dollar softness contributed to a favorable environment for commodities, particularly gold and oil, as investors sought refuge in these assets amid geopolitical tensions. ## Commodities Wrap - Oil: $61.50, down $1.00 - Gold: $1,950.00, up $15.00 Oil prices declined as oversupply concerns persisted, particularly with reports of increasing production levels globally. Conversely, gold prices gained traction as investors flocked to safe-haven assets amid the mixed economic signals and geopolitical risks. ## Global Markets Close - Europe: The major European indices closed mixed, reflecting the U.S. CPI data's impact, with some sectors benefiting while others faced pressure from geopolitical concerns. - Asia: Asian markets are set for a cautious opening as investors digest the implications of U.S. inflation data and ongoing tensions in the Middle East. ## Tomorrow's Macro Focus Key data to watch for tomorrow includes jobless claims and further comments from Federal Reserve officials. Additionally, the market will be attentive to any developments regarding U.S.-Iran relations and their potential impact on energy prices and overall market sentiment moving forward. Investors should also keep an eye on upcoming earnings reports, which could provide further insight into corporate performance amid shifting economic conditions.