Macro View - February 18, 2026 (Morning)

 ## Macro Snapshot Global markets are entering today's session with a cautious tone as investors digest a mix of geopolitical developments and economic indicators. A notable spike in oil prices—up by more than 2%—was triggered by comments indicating potential military action by the U.S. against Iran, which remains a focal point given its influence on global energy supplies. This uptick in oil prices reflects broader concerns about geopolitical stability, particularly in the context of U.S.-Iran relations. Additionally, recent discussions around Fed policies are causing fluctuations in U.S. Treasury yields and impacting currency valuations, notably the U.S. dollar. Overnight, the U.S. dollar has shown strength against a basket of currencies, driven by expectations surrounding forthcoming FOMC minutes that might indicate a shift in the Fed's stance on interest rates. As the market anticipates insights from these minutes, traders are weighing the implications for future monetary policy, particularly regarding potential rate cuts. The focus on inflation—especially following the recent cooling in the U.K. and U.S. data—will likely influence sentiment today. ## Overnight Global Markets - **Asia:** Asian markets experienced a rally, with the Nikkei 225 climbing 1.00% as investors reacted positively to strong export data from Japan, which saw a 16.8% increase in January exports year-over-year. This growth is largely attributed to robust demand from Asia, particularly China, which is encouraging for regional trade dynamics. - **Europe:** European equities are poised for a higher open as traders react to cooling inflation data from the U.K., which dropped to 3.0% in January. The report is seen as a potential catalyst for the Bank of England to consider rate cuts in the near future, thereby enhancing the appeal of equities over fixed income. ## Economic Data Today - **Fed Meeting Minutes** at **2:00 PM EST** - Expectation: Insights on potential shifts in rate policy - Why it matters: The minutes could provide critical clues about the Fed's future approach to interest rates, particularly in light of recent inflation trends and economic forecasts. ## Fed & Central Banks Recent commentary from the Federal Reserve indicates a cautious approach to future rate adjustments. Market participants are particularly focused on the upcoming Fed minutes for clarity on the central bank's outlook. The consensus suggests a potential pivot towards easing, especially if inflation continues to show signs of moderation. Meanwhile, the ECB remains vigilant but is also under pressure to respond to softer economic indicators across the Eurozone. ## Rates & Currencies U.S. Treasury yields are nudging higher ahead of the Fed minutes, with the 10-year yield hovering around 3.75%. This movement reflects investor anticipation regarding the Fed's potential shifts in monetary policy. Concurrently, the U.S. dollar is maintaining its strength, trading higher against major currencies as market sentiment remains mixed. The recent inflation data from the U.K. has not significantly impacted the dollar's performance, which is predominantly driven by interest rate expectations. ## Commodities - Oil: Prices surged over 2% as geopolitical tensions rise, particularly in light of U.S. military considerations regarding Iran. This development underscores concerns over supply stability in an already volatile market. - Gold: Prices steadied after a recent drop, with traders weighing the implications of U.S.-Iran talks and the ongoing geopolitical landscape against expectations for Fed policy shifts. ## Macro Risks to Watch - **Geopolitical Tensions:** Ongoing U.S.-Iran discussions could escalate, impacting oil prices and overall market sentiment. - **Fed Policy Shifts:** The upcoming Fed minutes could signal a change in monetary policy direction, influencing market movements significantly. - **Global Economic Slowdown:** Continued concerns about inflation and growth could lead to increased volatility in financial markets. ## Positioning Implications Traders should adopt a cautious stance heading into today's session, closely monitoring oil price movements and the outcomes of the Fed minutes. A potential shift in Fed policy could create opportunities in equities, particularly in sectors sensitive to interest rates. Additionally, maintaining a diversified approach may help mitigate risks associated with geopolitical developments and economic data fluctuations.